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Thursday, September 3, 2015
Pilbara Ports handles record iron ore exports during August
When you lower the price, you often can increase sales (measured in tonnes).
btw Bill looked at the AUD accounts earlier this week and for Q2 they are reporting a fall in "exports".... meanwhile they have iron ore going out the door to beat the band....
There was weakness in iron ore from April 2012 to Sep 2012 and then a recovery, didn't follow on the AUD. The weakness in AUD started in April 2013 (medium trend), not leadding byiron ore really that much. Also if you check longer cycle the correlation gets weaker.
There is a correlation, not denying that; yes, AUD is driven partially by commodity prices (like petrostates currencies are driven by oil prices/demand), but you cannot explain away all the variance from that. What is troubling, though, is that there is obviously an increasing dependence on commodity exports for Australia (hence the stronger correlation recently vs. 10 years ago), but that's not unknown of...
Anyway, could be: 1) corps in monetary zone A exchange currency A for currency B >> buy goods in monetary zone B >> drives price of currency B up; 2) corps in monetary zone A stop buying goods in monetary zone B >> balance of trade shifts as imports from monetary zone A to zone B keep up >> drives the exchange rate down;
You would have to look at contracts being settled (for iron ore) and transactions in that period to check for the causality, if you really think that prices are being driven by price cuts in commodities (leading).
AUD was already falling before the price cuts.
ReplyDeleteTake a look:
ReplyDeletehttp://www.xe.com/currencycharts/?from=AUD&to=USD&view=5Y
http://www.indexmundi.com/commodities/?commodity=iron-ore&months=60
rsp,
btw Bill looked at the AUD accounts earlier this week and for Q2 they are reporting a fall in "exports".... meanwhile they have iron ore going out the door to beat the band....
ReplyDeletersp,
There was weakness in iron ore from April 2012 to Sep 2012 and then a recovery, didn't follow on the AUD. The weakness in AUD started in April 2013 (medium trend), not leadding byiron ore really that much. Also if you check longer cycle the correlation gets weaker.
ReplyDeleteThere is a correlation, not denying that; yes, AUD is driven partially by commodity prices (like petrostates currencies are driven by oil prices/demand), but you cannot explain away all the variance from that. What is troubling, though, is that there is obviously an increasing dependence on commodity exports for Australia (hence the stronger correlation recently vs. 10 years ago), but that's not unknown of...
Anyway, could be:
1) corps in monetary zone A exchange currency A for currency B >> buy goods in monetary zone B >> drives price of currency B up;
2) corps in monetary zone A stop buying goods in monetary zone B >> balance of trade shifts as imports from monetary zone A to zone B keep up >> drives the exchange rate down;
You would have to look at contracts being settled (for iron ore) and transactions in that period to check for the causality, if you really think that prices are being driven by price cuts in commodities (leading).