insto - Australian financial markets

While monetary policy decisions taken in Washington can still influence emerging markets, their future growth may not be driven by the US economy, write Richard Yetsenga* and David Bloom*.

The startling race towards parity by the Australian dollar against the US dollar demonstrates the importance of commodity prices on currency rates, writes Bernard Kellerman.

By mid-October, the AUD/USD rate had climbed to a 14 and a half month high - somewhere above 0.9300. This meant the AUD had risen by more than US5 cents since the RBA first raised official interest rates by 25bps on October 6.

While monetary policy decisions taken in Washington can still influence emerging markets, their future growth may not be driven by the US economy, write Richard Yetsenga* and David Bloom*.

Investec Asset Management's chief investment strategist, Michael Power, spoke to Insto about gold, the rise of the renminbi and the formation of an Asian bond market.

Insto: You've had a lot to say on commodities, especially gold. What's your view on the outlook for gold in the near to medium term?

China could stand to gain considerable financial returns with moderate risks by investing its foreign exchange reserves in major US banks. According to a study in China & World Economy published by Wiley-Blackwell, it would be financially beneficial for China to help its strategic partner, the USA, and the world economy in general.

Michael Blythe, the Commonwealth Bank of Australia’s chief economist, provided this summary of the state of play on global and Australian growth prospects…

Global growth forecasts are proving to be something of a moving target at present.  The extreme pessimism evident in late 2008 / early 2009 is giving way to some cautious optimism that the low point for the global economy may be close at hand.  This shift is evident in both official (OECD, IMF) and private sector forecasts.   There are also some common themes:

One of the most important politico-economic groups, the G-20, finally lived up to its potential, producing a rare convergence of views that has the potential to free up world trade.

Following Washington talks, the International Monetary Fund (IMF) head Dominique Strauss-Kahn says an agreement has been forged on stimulus measures and the need to clean-up bad assets weighing on banks.

The International Monetary Fund is forecasting a prolonged and deep global recession in its latest World Economic Outlook publication. Futher, the director of the IMF's research department, Olivier Blanchard, is not ready to offer a date for recovery.

The International Monetary Fund (has approved a $65 billion line of credit for Mexico under a new scheme designed to provide cash lifelines to countries hit by the global economic downturn. The IMF said the arrangement is intended to be precautionary and it does not expect Mexico to draw upon the credit.