Companies affected by fall in the $US

Hi Tony,

Obviously a few moving parts here and we are only looking for the $US Index to fall ~10% over the coming years. However, this is against a  basket of currencies’ including the Euro, Pound and Yen. Against the $A we wouldn’t be surprised to see a smaller ~5% move unless Chinas economy can return to growth. A quick glance at a few different market perspectives illustrates  some of the variables:

• Resources – if the $US falls by 10% the likelihood is that commodity prices will rise, they often have an inverse correlation which by definition will offset the move in the Greenback – see the chart of the $US v gold below.
• We discussed CSL in another question today and again its not a straightforward equation.
• The main driver of a lower $US is likely to be declining interest rate which assuming the RBA eventually follows the FED  should deliver a tailwind to many businesses/stocks to help offset the $US.
• If the $A outperforms the $US we might see a repatriation of funds to the ASX which again would offset other potential headwinds.

Overall while we are conscious of our view towards the $US its unlikely to impact our broad decision making as much as say declining interest rates.

chart

The $US Dollar Index v Gold ($US/oz)

LAST UPDATED 29/08/2024 14:57

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chart

The $US Dollar Index v Gold ($US/oz)

LAST UPDATED 29/08/2024 14:57