*Originally posted by MrWhy *
To continue the hijack …and at the severe risk of boring the pants off the US based dopers …
Being involved in Ag Economics, I have a familiarity with them.
If, by linking this post to the OP, you took it that I was stating the relationship between the CME and the AUS was direct or cause and effect, that was not my intention, nor is it correct. However, colleagues who work in US as commodity traders will concur that their modeling of the Australian economy builds in the CME prices for these commodities, not because the brokers think Aust. produces them but because they have no other liquid measure to estimate the day-to-day value of the Aust. agricultural sector
Indeed, I’d rank coal #1 and I don’t think wool still makes the top 5 but that is neither here nor there in this context.
Indeed, again, I’m in agreement with your premise. My position is that as the domestic economy changes, the AUD should be progressively uncoupled from being valued based on it’s historical position as an exporter of raw commodities. As an example, Nokia is valued based on their telecommunications business, not still valued as the pulp and paper company they were not so long ago. Hong Kong is now a service economy, not a rag trade sweat shop (their currency is, of course, not freely floating).
It’s perception is certainly that, but it is a simplification and a stereotype. It ignores the service sector, tourism etc. The same argument would state that the US is a high-tech currency which would ignore the US’s position in energy, minerals, chemicals, agriculture, heavy industry etc.