Westpac has increased its forecasts for the Australian dollar to rise above parity with the US dollar by year’s end, but also says the housing market will remain flat during 2011.
In an update to its currency forecasts, chief economist Bill Evans said Westpac has raised its target to $US1.02 by the end of the year, up from US98c. The bank’s June 2011 target is now at $US1.05, although it does expect the dollar to fall back to between US95-100c in the second half of 2011.
“On today’s reading of around USD 98.0 or so the AUD only needs to keep pace with a fall in the USD of around 4% for it to register USD $1.02. That looks extremely likely over the next two months or so.”
“Current market momentum suggest these targets are conservative,” Evans said, adding that Westpac expects the US dollar to remain weak for the next eight months as the Federal Reserve attempts to help prop up the economy.
It also predicts the Reserve Bank of Australia to lift rates next month and next year, which will “stand out in a world where other central banks are easing policy”.
However, Evans notes that, “sometime in the second half of 2011 we are likely to see the quantitative easing policies curtailed.
“That should see a significant increase in demand for the USD. We also expect that the Australian economy will be losing some momentum around this time, which will see the Reserve Bank firmly on hold.”
Cooper review member Meg Heffron has told Business Spectator that SMSF providers should be held to national accreditation standards, and that regulators should start looking more into firms and how they are
“I don’t think it was really feasible for us to recommend this from the perspective of the Cooper review because it’s probably too much at once. And perhaps too interventionist,” Heffron said.
“[But] the reason I think we could and should go this far is because one of the themes that the Cooper review identified with SMSFs is we largely need to let consumers get on with it, but we need to help them by making it easy to identify people who are capable of servicing them.
“And I think one thing that’s lacking at the moment is all this focus on the individual and not enough focus on the firm.
The Australian share market has opened lower this morning following a disappoint result from Wall Street overnight, where stocks have fallen due to weak employment data.
The benchmark S&P/ASX200 index was down 18 points or 0.36% to 4673 at 12.10 AEST, while the Australian dollar has fallen slightly to US98.3c
AMP shares lost 1.1% to $5.27 as Commonwealth Bank shares lost 0.8% to $51.07. NAB shares fell 0.9% to $25.61 as Westpac dropped 0.6% to $23.15.
Meanwhile, the Roy Morgan Consumer Confidence rating has increased by 1.5 points to 122.9 points compared to last week, but is still down by 4.4 points compared to the same time last year.
The number of Australians who believe “now is a good time to buy” major household goods increased by 3% to 59%, representing the highest percentage since 17 January. About 32% of Australians say their family is better off financially than a year ago, up by 3%.
Meanwhile, Sundance Resources has now appointed Sinowest Midsteel executive Giulio Casello as its new chief executive. His appointment will complete the restitution of the board following the Congo plane crash in June, the company said.
“While in one sense we announce his appointment – and the other recent appointments – with heavy hearts in recognition of the terrible loss that we have all experienced this year, I firmly believe that we must look to the future with a positive spirit and with a focus on capturing the significant opportunity that lies ahead of us,” acting chief executive Peter Canterbury said in a statement
“We have been able to move quickly to stabilise the Company and secure its future by assembling a world-class Board, supported by other key senior management appointments.”
Elsewhere, small shareholders in Potash have launched a class-action against the company accusing it of ignoring their interests when rejecting a $US39 billion hostile bid from BHP Billiton.
“The directors of the company have served their own interests before those of Potash shareholders and acted oppressively and in a manner that unfairly prejudices and disregards the interests of shareholders,” the shareholders said in their complaint.
Stocks on Wall Street have fallen due to weaker commodities and worse-than-expected employment data released earlier this week. But investors are also wary regarding today’s non-farm payrolls report, which is expected to show a largely unchanged market.
However, investors also anticipate the release of the report, as a weak result will hopefully spur the Federal Reserve into propping up the economy with further stimulus. The Dow Jones Industrial Average fell 0.17% to 10,948.58.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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