I have been saying for more than six months that interest rates will keep on falling, probably eventually down to zero in the next few years.
When I first said this late last year, there were many people who said it would just not happen.
Well the trend is now clear that this is where we are heading, as evidenced by the Reserve Bank of Australia decision to further lower the cash rate by 25 basis points to 1.50%.
I also believe that the Australian Dollar is set to rise, although there will most likely be an immediate drop. The Australian Dollar is currently on a yo-yo between 73-76 US Cents, but I believe that after the US Election is out of the way it will rise over 80 US Cents by early 2017. Again, this is against the grain of popular thinking, as many other people say that it will be coming down below 70 US Cents.
What can I say about iron ore prices? It is a funny old market at the moment.
While there are higher prices for iron ore at the top range of US$58-$62 this is at very little volume so is quite misleading.
In reality global metal prices are flat, even reducing. Because of global economic slowdowns, particularly in Europe, there is a lack of appetite worldwide for ferrous metals.
For this reason, I do not believe there is a lot of substance in the current higher iron ore prices and I would be very surprised if they stay where they are now. However, in mid-to-late 2017, I think we will see a steady rise.