The Australian Dollar

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friend", all the fundamentals must be taken into account in the longer term. The fundamentals currently being overlooked (which we feel will come to matter) are (1) the outlook for commodity prices; (2) the extent of the Asian recession, (3) the path of the current account deficit deterioration and (4) the prospects for interest rates.
Despite some success in diversifying the export base away from near complete reliance on primary commodities, Australia remains one of the world's most commodity dependant economies, and hence the term "commodity currency" for the A$,. Recent data confirms that primary products account for around half of total exports of goods and services, with total manufactures at 25%, and services accounting for around 23%.
There is considerable uncertainty over commodity prices. Prices for many commodities are at their lowest levels for several years. While there is considerable anticipation in some markets for price improvements for individual commodities, ...

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