Weaker US could send Aussie dollar higher
The Australian dollar hit a new 17-year high of US82.59 cents at 8.30 this morning. It could break through the US83 cents mark if US Federal Reserve meeting minutes released tonight suggest the US economy is slowing.
The Australian dollar was trading at US82.46 cents at 11.00 this morning, driven primarily by the increased likelihood that Cemex’s offer of $17.5 billion will allow it to take over building products manufacturer Rinker Group, and on confirmation that private equity giant Kohlberg Kravis Roberts is interested in Coles.
Ozforex’s Jim Vrondas says the Australian dollar might experience a shallow correction around the US82 cents mark today, but all the signs are for a stronger dollar over the week ahead.
“All this M&A talk with Rinker and Coles and the inflationary pressures that everyone knows are around, both point to a higher Aussie in the short term,” Vrondas says.
Tonight the US Federal Reserve will release minutes of its May meeting, which decided not to raise US interest rates. Vrondas says if those minutes reveal an increased concern with slowing growth rather than inflation, “there is no doubt the Aussie dollar will go through US83 cents or beyond”.
ANZ senior currency strategist Tony Morriss says it is likely the minutes will maintain the Fed’s tightening bias, although there may be signs of an increased sensitivity to growth issues.
He predicts the Australian dollar will remain around its current high levels, causing trouble for the agriculture, manufacturing, tourism and resources sectors.
But it is not all bad news, he says, with retailers and wholesalers enjoying growth as consumers snap up the cheaper imports the strong Australian dollar can buy.
– Mike Preston
Concerns over environmental impact on business
Coastal businesses could see their properties devalued if listed on a climate change hit list. The Australian newspaper reported this morning that a $300 million project to examine the impact of climate change on coastal areas and farm land is under consideration at the Council of Australian Governments summit to be held this Friday.
One suggestion is that a map is drawn up looking at the coastal communities likely to be affected by rising water levels, mapping businesses, homes, transport and port facilities likely to be washed away.
The report says that scientists have already begun working on a digital map of Australia’s coastline to help identify communities likely to be affected. Business and home owners in “at risk areas” might also find it hard to get insurance as one business risk analyst reported the cash value of a home would be cut by 80% if it were deemed uninsurable for a severe weather event caused by global warming.
– Amanda Gome
More profit for clean entrepreneurs
Small businesses can boost profits by cutting back on energy and water use – and feel good about doing so. But a survey by VECCI shows that more than a third of businesses do not plan on cutting back and half are unaware of their water and energy use over the last six months.
A survey of 90 businesses shows they rank themselves poorly when asked to compare performances to that of households.
VECCI has announced a new campaign to assist businesses save on costs. Top tips to save electricity include replacing standard light globes with energy-efficient compact fluorescent bulbs and installing technology to ensure lights are turned off when not needed. Turn off TVs, DVD and VCRs at the switch – not by remote control. Switch off all computers, printers and other equipment at the end of the day.
For more suggestions, click here.
– Amanda Gome
States reject federal ports takeover
State premiers have rejected a Federal Government plan to impose a single national regulator on Australia’s ports in the lead up to Friday’s COAG meeting.
Treasurer Peter Costello has attempted to leverage bottlenecks at ports in Newcastle and Queensland in an attempt to persuade the states to hand over control to the Federal Government.
Red tape reduction is also on the crowded agenda for the COAG meeting, with talks to focus on moving towards unified business name registration, product safety and building regulation regimes.
– Mike Preston
Online insider trading
A share trading website, HotCopper, has found itself at the centre of an insider trading case against Melbourne man, Peter Robert Woodland.
The Australian Financial Review reports this morning that the Australian Securities and Investments Commission has alleged Woodland was in receipt of market-sensitive information while trading in minerals explorer Kanowna Consolidated Gold Mines and that he illegally shared the information with others.
Raids on Woodland’s home computers allegedly linked him with postings on HotCopper giving cryptic details of Kanowna’s acquisition of an Argentinean goldmine before it was announced on the ASX. The first posting contained the words: “OK boys, here it is…Super cryptic clue to our future … ‘Don’t cry for me’ ????”.
– Jacqui Walker
G9 promises bargain broadband
The G9 group of non-Telstra telecommunications companies has told the Federal Government it will cut wholesale broadband prices to well below the rate Telstra would charge if it is given the green light to proceed with its broadband network plan, The Australian Financial Review reports today.
The G9 group, which includes Optus, Macquarie Telecom and AAPT, says it will charge just internet providers $21 per month for access to its fibre to the node broadband network, half of what analysts expect Telstra to charge.
But analysts are doubtful the G9 could get finance for the construction of its network if it charges the low wholesale price. Telstra also dismissed the G9 price, labeling it “fictitious”.
– Mike Preston
Google ‘fesses up
Oops. US search giant Google has apologised to a Chinese rival that complained Google used its data in a new internet tool.
Sohu.com claimed that Google’s tool for inputting Chinese characters appeared to copy material from Sohu’s Sogou search engine (which means “search dog”), according to a report published in The Australian Financial Review. It was users that noticed the similarities.
In a statement Google says: “We are willing to face up to our mistake, and offer an apology to users and to the Sohu company.”
In yet another sign of the strong state of the Australian economy, dwelling finance commitments increased 3.3% seasonally adjusted in February, driven by a strong 8.9% in investment housing finance, according to Australian Bureau of Statistics figures released today.
The ASX/S&P 200 is fairly steady this morning after yesterday’s strong rise, up just 0.1% to 6159.9 at 11.35am.