The Australian dollar crashes let’s have a look hello everyone I’m Florian Heiser. And welcome to another episode of Heiser says I have my evening line of coffee and I thought would have a look at this article from news.com written. By James Hall he’s discussing the 18-year low that the Australian dollar hit today now before we go through this that’s just jump to. Trading economics we can see here on the chart the. Dollars at 5725 look at that plunge class and at some point today we were at. 55 cents a thing did we hit 54 was that our low today let me know in the comments guys I recall seeing it maybe.
I was imagining it maybe I was imagining 54 and we got really close we were very close to being on par with the New Zealand dollar as. Well what does that tell us guys so let’s have a look at this 18-year low so the Aussie dollar has dropped to 55. US cents the lowest since 2002 as the horrific global growth outlook combined with an emergency rate. Cut take its toll well it was below it was at that level before the rate cut even was sent now instead just plunged all night you’re watching it’s crazy the dollar plunge to. An 18-year low of 55 US cents as the global economic outlook crumbles under the spread of the deadly illness the wide spare white widely expected emergency.
Interest rate cut to 0.25 percent which Commonwealth Bank isn’t passing on is your. Bank passing it on that let me know in the. Comments I think it’s time to shop around what I’ll be doing is I’ll ring up you know. Because I’m with the calm bank I’ll bring them up and go oh I want a reduction you know put a 2 in the front of my interest rate please or I’ll start. Looking around you know can’t hurt to try can it so it was priced into the currency hangs tentatively waiting on details of QE effectively encouraging consumer spending by printing more money and. Pumping it into the economy well doesn’t most of the q we just go into.
The stock market so then hopefully you have the wealth effect and it doesn’t actually work do we really want. Well we’ve got socialized isolation we got businesses shutting down.
It’s definitely an interesting time to be alive isn’t it everyone it’s definitely definitely interesting the Aussie who was. Buying just 55.1 us since shortly after lunch the weakest since 2002 the dollar is seen as a proxy for global growth Westpac senior currency strategist sean callow told news.com today you I thought it’s. Also used as a proxy for China I thought it was used as a proxy.
For the Chinese economy he said most major currencies have been weakened by the continual spread of the illness as another 400 475 deaths were confirmed overnight in Italy creating a horrible brisk environment for. Investors as travel restrictions amplify and Australia’s essentially been walled up now probably too late much too late Russia closed their. Borders much earlier how are they doing guys how are they doing as a nation the Aussie seems to get over punished when the global economic outlook deteriorates he said well it’s because because.
Of very simple reason a very simple reason and this is the same reason why Australia weather the GFC because we’re a quarry you know we mined all these resources we don’t value. Add to them because our economy is very primitive we’re 59th in the world of complexity from the old we see with honey. Third from the Harvard Atlas we import all our complicated things because we couldn’t we couldn’t. Make them here and the biggest destination and source for all of our exports and imports is China we’re in bed with China guys we’re in bed with China. It’s that simple and China is the manufacturing hub of the world so if global growth is looking down Chinese growth is.
Looking down Australia’s looking down you know there you go guys 56 cents you know I don’t. Know why he’s posting about the Wiggles but okay IG market analyst Carl Roda said the US dollar strengthening against.
All others was perhaps the greatest red flag because it showed other defensive assets had been abandoned as investors retreated to lick their wounds all other safe. Haven assets have been bypassed for dollars as the only thing. That seems to matter for the market is the quiddity he said in his note this morning market participants want cash in US dollars but there’s. Not enough to meet the demand meanwhile mr. Otis said investors would be eager to dissect RBA governor.
Philip Lowe’s explanation for the central bank’s historic rate cut this afternoon which sold the Australia’s cash rate lashed from 0.5% to a new low 0.25 percent and I’ll bring it up here you can. See there you go guys he go crazy clam world we’re definitely living in a clam world aren’t we the devil will be in the detail so. How big this program is going to be whether they’ll have other measures. To try and support the financial system and stimulate economic growth he said the impacts. Will reverberate through the market once we know that outcome the central bank wasn’t scheduled to meet until the first Tuesday of April the Australian share market lost hundreds of. Billions of dollars in the past two weeks and is bracing for further heavy losses as businesses across the country grind to a halt and let’s just jump over here guys we’ll.
Have a look at trading economics look at the stocks Oh 4700 for the asx200 there you go guys I’ll bring up that chart let’s. See how that’s talking let’s see oh look at that look at that Wow Wow where’s that. Kind of head everyone is trying sharemarket I’ve already read that so the RBA cuts. Rates to 0.25 the central bank followed through with the widely expected move to slash interest rates to 0.25 percent this afternoon two weeks ahead of the scheduled meeting on the first Thursday of April. It is the first time it has announced outside of a.
Regular meeting since 97 and is a glaring sign of just how severe the situation is becoming but guys we all have complete confidence in the RBA’s abilities. To manage and intervene in the economy like a finely tuned machine do you think out of all of this mess people are going to start to wake up and realize. That the theories behind all of this you know the economic system that we have now is is proven to fail. You know we’ll get more modern monetary theory will it will it go back to other standards.
Will people start looking at Austrian economics maybe we need a revival maybe our politicians need to learn a bit more let me know your ideas in the comments below guys governor Philip lo also. Announced other measures including quantitative easing which are designed to make sure credit remains available to individuals and businesses the illness. Is first and foremost a public health issue but it is also having a very major impact on the economy and the financial systems he said. In a statement this afternoon as the illness has spread countries have restricted the movement of people across borders and. Have implemented social distancing measures including restricting movement within countries and within cities the result has been. Major disruptions to economic activity across the world this is likely to remain the case for some time yet as epochs continue.
To contain the illness my understanding is they’re looking at having this cash rate. For what three years financial market volatility has been very high equity prices have experienced large declines government bond yields have declined to. Historic lows however the functioning of major government bond markets has been impaired which was disrupted other markets giving given their important role as a financial benchmark funding markets.
Are open to only the highest-quality borrowers the primary response to the illness is to manage the health health of the population but others other arms of policy. Including monetary and fiscal policy play an important role in reducing the economic and financial disruption – resulting from. It so there we have it guys the stock market as is plunging every day after day. We’re getting a bounce down bounce down bounce down that’s after the repurchasing spending. By the RBA is also increased the Aussie dollar wait that’s how it exports the Aussie dollar now at 57 so to come up again. From when the article was written there you go it’s not looking very strong is it and our cash right it’s just that so guys what do you think what do you think.
Where do you think the dollar is gonna finish up you think we’ll see 50. Cents you think will be worth less all the same as it ends it let me know your thoughts and opinions. In the comments below thank you all for watching please like share and subscribe to the channel if you’re a family you want. To help us produce content there are a few ways you can support the channel you can join us here. On youtube or on patreon for a small monthly fee you can use our affiliate links.
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