The strong Australian dollar continues to have an impact on returns from the resources boom.
We've seen how Rio Tinto struggled with costs and especially the Australian dollar in the June half. And we can expect more from other leading resource companies, such as BHP Billiton, Zinifex and Oxiana.
Some of these companies will report higher earnings, but the impact of the higher Aussie dollar will be to trim these gains at the margin.
The Aussie rose against the yen yesterday and against the greenback, it advanced to 85.44 US cents
The Reserve Bank released its Commodity Price Index for July yesterday.
"Preliminary estimates for July indicate that the Index fell by 0.1% in SDR (Special Drawing Rights) terms, following a fall of 0.9% (revised) in June.
"The largest contributor to the fall in July was the decline in the price of nickel, partially offset by higher lead, wheat and copper prices."
In Australian dollar terms, the Index fell by 1.9% in July following a fall of 3.4% (revised) in June.
The Australian dollar index value of 135.1 was the lowest since February 2006, 17 months ago. In SDR it was close to an all-time high set in May and that was the case for the index in $US terms.
With the dollar's upward progress halted for the time being because of the sub-prime turmoil, we might see the fall in $A terms in commodity prices ease. Well, that's if commodity prices don't start falling from this month, as they started doing a year ago.
