Currencies

Municipal bonds became the latest domino to fall in the credit crisis on Friday, and a raft of bad economic and corporate news conspired to send the Dow down 300 points.

The Australian dollar this week hit a 25-year high against the US dollar but TD Securities sees further gains ahead, predicting parity and beyond by the end of the year.

More downbeat comments from the Fed, a weak GDP, soaring oil and gold as the greenback slides, and a down day for the Dow.

BMW is threatening to slash it’s workforce. Airbus is struggling. Asia is trying to keep a lid on its currencies and the Russians are moving to trade commodities in the ruble. All because of the crashing greenback.

On February 27, 2007, Wall Street collapsed in response to the Shanghai Surprise – a response that alerted the world to something called “subprime”.

As global economic growth forecasts fall, and commodities indices rise, it would seem the world is facing the crippling spectre of stagflation.

ANZ Bank sees little downside for the Aussie dollar before next week’s RBA meeting.

An announced US$15bn buyback by IBM turned Wall Street around in the face of stagflationary data.

The Dow exploded to the upside mid-afternoon when S&P announced bond insurers Ambac and MBIA could both keep their AAA ratings.

With the US further advanced in its downturn than is Europe there is scope for a medium-term turnaround that would see the US dollar reverse its downtrend against the euro.