Big Mac Bargains Spur Forecasts 3-Year Aussie Rout Will End
Jan 18, 2016 14:16:57 GMT 7
wildoats likes this
Post by Fletchsmile on Jan 18, 2016 14:16:57 GMT 7
Maybe better times for our Aussie friends on the horizon... If not, maybe MacDonalds are hiring 
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Big Mac Bargains Spur Forecasts Three-Year Aussie Rout Will End
-Big Mac index shows Australian dollar is undervalued by 30%
-Aussie offers value though gains will take time: Nikko Asset
The cost of a Big Mac is giving Australian dollar forecasters ammunition to predict an end to a three-year rout.
Australia’s currency is undervalued by 30 percent, based on the price of the McDonald’s Corp. hamburger in the nation versus the cost in the U.S. The last time the gauge designed by the Economist magazine was at this level was 2009, and the currency went on to rally 28 percent that year. A separate measure of purchasing power parity from the Organization for Economic Co-operation and Development shows the Aussie is overvalued by about 1 percent, dropping from 17 percent a year ago.
The three-year selloff was driven by an economic slowdown in China that drove down the prices for Australia’s commodity exports. Bloomberg surveys of economists show all of that’s going to change in 2016 as growth quickens and the price of iron ore, the nation’s biggest export, picks up. The decline in the Australian dollar will come to an end, based on the responses.
contd.
www.bloomberg.com/news/articles/2016-01-17/big-mac-bargains-spur-forecasts-three-year-aussie-rout-will-end
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Big Mac Bargains Spur Forecasts Three-Year Aussie Rout Will End
-Big Mac index shows Australian dollar is undervalued by 30%
-Aussie offers value though gains will take time: Nikko Asset
The cost of a Big Mac is giving Australian dollar forecasters ammunition to predict an end to a three-year rout.
Australia’s currency is undervalued by 30 percent, based on the price of the McDonald’s Corp. hamburger in the nation versus the cost in the U.S. The last time the gauge designed by the Economist magazine was at this level was 2009, and the currency went on to rally 28 percent that year. A separate measure of purchasing power parity from the Organization for Economic Co-operation and Development shows the Aussie is overvalued by about 1 percent, dropping from 17 percent a year ago.
The three-year selloff was driven by an economic slowdown in China that drove down the prices for Australia’s commodity exports. Bloomberg surveys of economists show all of that’s going to change in 2016 as growth quickens and the price of iron ore, the nation’s biggest export, picks up. The decline in the Australian dollar will come to an end, based on the responses.
contd.
www.bloomberg.com/news/articles/2016-01-17/big-mac-bargains-spur-forecasts-three-year-aussie-rout-will-end
