The Australian Dollar

By Group IV (Chris Barnes, Pat Heffernan, Chris Trick, Austin

Weaver, and Tim Moore)

History

• Australia was settled by England in 1788

• Originally used goods like rum to barter when the many forms of money present weren’t easily exchanged

• 1901 Australia became an independent nation, and in 1913 (based on the British system) the first series of notes were issued

Rum for Sheep

History

• In 1963 Australia moved to the decimal system and changed the currency name to the “dollar” in 1966

• In 1988 they switched from paper to a plastic polymer that lasted longer, was harder to counterfeit, and easier to recycle

• Now Australia prints these polymer notes for several countries around there like Sri Lanka

Paper Money

Coins- .05, .10, .20, .50, 1, 2

Interesting Depictions

• Every coin has Queen Elizabeth II of Great Britain, Northern Ireland, and Australia

• 5 cent has an Echidna (spiny ant-eater)

• 20 cent has platypus

• 1 dollar has five kangaroos

Exchange Rate

• Current Rate 1.00 AUD= .79092 USD

= .59653 EUR

• Has depreciated against the USD over the past few years, despite the weakened USD

• It is anticipated to appreciate slightly over the next few months

AUD/USD Past 20 Years

Past 5 Years

Technical Analysis

• AUD/USD- Positive AUD technical evidence continues to favor price gains vs USD going forward into March 2005.

• Looking for a rallly over 0.7945 and .8, en route to retest the Dec. 1996 peak of 0.8212.

• Only a drop below “Key Daily Trend Support” (currently at 0.7746) would break bullish AUD alignment

• Could threaten instead a return to 0.7500 and 0.7440/50

Bump and Run (120 Days)

Bump

Run

Inflation• Inflation in Australia will rise toward 3 percent next year,

the country's central bank predicted Monday • Inflation stood at 2.6 for 2004, expected to rise to at least

3 percent by the end of 2006 • The bank warned it may hike interest rates to cool

inflation. Raising rates makes it more expensive to borrow money and tends to drive down domestic consumption, one of the drivers of inflation

• The central bank's benchmark interest rate has remained

unchanged for 14 consecutive months at 5.25 percent.

Economic Indicators

Economic Indicators

Arbitrage This!

• AUD/USD = .7909

• EUR/AUD = .5965

• EUR/USD = .7543

Cross Rate: .5965/.7543 = .7907

• “Arbitrage opportunity,” but not really

Love me for the Money

Australian Dollar