The RBA has just released its Commodity Price index for August and while they like to focus on the obscure measure of commodity prices in Special Drawing Rights terms, the index in Australian Dollars gives a better indication of the impact the trade off between commodity prices and movements in the Australian dollar is having on national income.
As you can see Australia is making more money, not less, from commodity exports even though the mining boom is over. It’s the mining “investment” boom which has passed its peak but a growing global economy and a falling Australian dollar can combine to boost national income. But the really good news is that all components of the index, rural, non-rural, bulk commodities and base metals were higher.
It’s another reason the RBA wants the Aussie dollar to fall – it just cushions the blow of the investment boom ending and spreads money around the economy.
Disclosure: Greg McKenna is an active currency trader and is currently short AUD.