In an interview with The Australian Financial Review, Sir Michael Hintze has warned that the slowdown in the growth of China’s economy will likely lead to lower prices for Australian exports, further weakening the Australian dollar against the US dollar.
In the interview, Hintze noted:
“Price is often set at the margin and this slowdown in China’s growth rate is affecting the price of commodities and is likely to continue to do so… It hasn’t helped that in Australia there have been a number of cost over-runs, in part due to high labour costs and work stoppages.”
Hintze also addressed the likely impact of the end of quantitative easing in the United States, noting that:
“As the Fed ends its taper, which is an effective tightening, there will be QE coming from the European Central Bank, China and Japan. This is likely to drive the US dollar higher.”