Oliver's Insights - Global reflation mark II, gold and the Australian dollar
28 Sept 2010 - This note looks at the implications of more quantitative easing by major industrialised country central banks.
The key points are as follows:
- The sub-par recovery in the US, Japan and Europe and constrained fiscal policy most likely means that we will see another round of global policy reflation, centred on quantitative easing, or printing money.
- This will be bad news for G3 currencies, but good news for Asian currencies and gold. It will likely also help stimulate the next asset price bubble, which could well be in emerging markets or commodities.
- The Australian dollar is likely to head higher as Japan and the US boost their money supplies and the Reserve Bank of Australia continues to raise Australian interest rates, with the next rate hike still on track to be in early October.
