Australian Dollar Wobbles on Geopolitical Concerns – US / North Korea (James Lovick)

The Australian dollar has seen another wobble after that has been a good performance from the Aussie over the last month. The Aussie has slipped lower on the back of developments stemming from both China and North Korea. The trade war between the US and China appeared to be cooling off which was working in the commodity currency’s favour although Trump was reported to have said that “There is no deal” signalling that there might not be an agreement on how to reduce the size of the US deficit with China.

There are mixed signals coming out of the US on this important matter and there did appear to be progress up until recently. The Australian dollar is directly impacted by these events as China is Australia’s largest export market and a slowdown in the global economy is generally seen as bad for the Aussie.

It’s not just the US China trade battle to consider though, US President Donald Trump has indicated the summit with North Korea may not happen with a strong chance that it won’t work out. These geopolitical concerns continue to have a negative impact on the Aussie so expect more volatility for AUD exchange rates in the coming weeks.

Selling Australian Dollars for Pounds?

Those clients with pending requirements should monitor developments in Britain over these coming weeks. I have posted previously that the House of Commons will shortly vote on the Brexit withdrawal bill that has been put forward by the House of Lords with a series of amendments. UK Prime Minster Theresa may does not have a sufficient majority to push through her vision of Brexit and if the amendments are defeated in the Commons then there could be a vote of no confidence in the Prime Minister. This could create considerable volatility for the pound on the back of political uncertainty. It could also end up in a general election.

Clients looking to sell Australian dollars could see some better opportunities around the corner although it is my view the Prime Minister may have a shot at putting pressure on other politicians who represent Leave backing areas of the country. If she is able to win votes from Labour politicians then she could sail through with her Brexit which could see the pound rally on renewed confidence. Clients would be wise to plan around this event in these coming weeks as there is a huge amount at stake on how this ends up for GBP AUD.

To discuss your currency requirement and for assistance to achieve the best rates of exchange then please get in touch with me James at jll@currencies.co.uk

GBP/AUD could be set to fall further after UK inflation unexpectedly drops

Bets in favour of the Bank of England hiking interest rates in the UK this year slid yesterday, after the UK inflation data released showed a drop in the cost of living in the UK.

Markets weren’t expecting this, and the Pound’s trend appears to have reversed after losing almost 10-cents against the Australian Dollar over the last month or so.

The markets had expected to see an interest rate hike two-weeks ago today after the UK economy had been showing some positive signs, but the drop in economic growth (its fallen to a 5-year low according to the latest GDP figures) has put the brakes on these plans.

Some economists are now predicting that it may not be until November this year until the next hike happens and that will of course be determined by how the UK economy performs.

There haven’t been a lot of reasons for the Aussie Dollar strength and I think the recent price changes can be put down to the Pound’s weakness. There aren’t expected to be any rate hikes down under this year and the Australian economy has also demonstrated signs of a slowdown.

The current GBP/AUD level is trading at a 2-month low, and if you wish to be updated in the event of a spike in the price do feel free to register your interest.

If you have a large currency exchange to carry out in the coming days, weeks or months then you are more than welcome to speak with me directly as I will be more than happy to help you both with trying to time a transaction and getting you the top market rate when you do come to buy your currency. A small improvement in a rate of exchange can make a huge difference so for the sake of taking two minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can email me (Joseph Wright) on jxw@currencies.co.uk and I will endeavour to get back to you as soon as I can.

Australian Dollar loses a little ground with economic data miss and Chinese debt still a concern for the RBA

The Australian Dollar lost a little ground in trading yesterday following poor construction data and concerns from the RBA over Chinese debt and the two together led to a drop in demand for AUD and a slight drop in value to go with it.

Construction work was 18% down on figures over the same period last year and only rose 0.2% for the quarter compared to expectations of 1.3% which is quite a big miss.

RBA Governor Philip Lowe remained firm that the RBA would not be in any rush to make adjustments to monetary policy anytime soon and he also commented that a clear build up of debt and bad loans in China is also a considerable risk to the Australian economy. He cited that there have been similar situations in the past that have led to economic slowdown or a full blown financial crisis.

China at present is a large importer of Australian food and service and Chinese tourists currently account for 25% of all tourist Dollars spent in Australian currently, not to mention China being a large importer of Australian iron ore and coal.

This news unnerved investors who are already getting mixed news regarding Donald Trump and trade tariffs  and are already looking to come out of the Australian Dollar due to stagnant interest rates where other seemingly more stable economies around the world (for example the United States) are making their moves and raising interest rates, even now to a point where the USD is a more attractive currency than the AUD as it offers a better return for investors money.

If you are in the position that you need to carry out a currency exchange involving Australian Dollars and you would like to be kept up to speed with any rate changes then you are more than welcome to get in touch with me and I will be  happy to help you personally. The brokerage I work for has been operating for 18 years now and we pride ourselves on getting clients not only the best exchange rates on the market but also offering the very highest level of customer service too.

If you would like to discuss a specific scenario or exchange with me then feel free to email me (Daniel Wright) on djw@currencies.co.uk and I will be more than happy to get in touch personally.

US-China Trade War Truce bodes well for the Aussie (Daniel Johnson)

Halt on tariffs benefits the Aussie

There has been an ongoing trade war between the Chinese and the US following Trump’s appointment as President. He has a thinly veiled issue with the Chinese and is highly agitated at the amount of debt the US is in to the Chinese. His mantra is “make America great again” and he took fire at the Chinese by threatening to impose tariffs that were simply unrealistic, that would be detrimental to both sides.

These tariffs would impact Chinese growth and in turn hit the Australian economy. Australia is heavily reliant on China for the purchase of it’s raw materials, particularly iron ore. If the Chinese economy suffers due to Trump’s tariff s the knock on effect will impact the Australian Dollar.

The US and the Chinese have recently agreed to put a halt to the trade war under the premise that China will purchase USD 200bn worth of US goods and services. Following this announcement the Aussie strengthened significantly. In particular against Sterling, this news along with poor economic data and a very  poor interest rate forecast from the Bank of England (BOE) has caused the pound to lose nearly 10 cents against the Australian Dollar. It was only recent we saw GBP/AUD at 1.84, we were in the 1.76s during today’s trading.

When to move?

AUD Sellers- Take advantage of current levels, 1.80 is an incredible selling price, let alone 1.76. Keep in mind GBP/AUD was 2.20 pre Brexit and the Pound is chronically undervalued.

AUD Buyers – If you have to move short term I’m afraid 1.79 should be your new target, the 1.80 resistance point has now been broken.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker if you wish to maximise your return. If you let me know the details of your trade I will endeavour to produce a free, no obligation trading strategy for you. If you have a trade to perform I will also happily provide a free quote and I am confident our rates are among the best in the industry. I would be willing to demonstrate this in form of a comparison with any competitor. You can trade in safety knowing you are dealing with company FCA registered and one that has been trading for 16yrs. Foreign Currency Direct PLC.

If you would like my assistance I can be contacted at dcj@currencies.co.uk. Thank you for reading. Daniel Johnson

 

Will the Pound increase towards the end of the week vs the Australian Dollar?

The Australian Dollar has improved vs the Pound during the last few days as political tensions between the US and China appear to be easing recently.

Previously, it was suggested that Australia could be caught in the middle of the trade wars between the world’s two largest economies and as Australia is heavily reliant on what happens with the Chinese economy this can often have a big impact on the value of the Aussie Dollar.

Longer term I still think the Australian Dollar will weaken once again as the economy is still rather fragile down under. Inflation is still below the required figure and the Reserve Bank of Australia have suggested on a number of occasions that they will be keeping interest rates on hold for the foreseeable future.

Meanwhile I fully expect the US to continue on its path of increasing interest rates during the course of 2018 and whilst growth continues to rise in the US I think this will cause global investors to sell off the Australian Dollar in favour of the US Dollar which will provide strong growth and a very positive yield.

This would typically cause the AUD to weaken against a number of different currencies including vs the Pound so I would expect the Pound to make gains in the medium to longer term vs the Australian Dollar.

In the short term the focus will likely turn to what is happening with UK economic data as data in Australia is rather thin on the ground this week.

Tomorrow morning UK inflation is due to be published and this has been a big factor in how the Bank of England has reacted recently as if inflation continues to remain high the general theory is that a central bank increases interest rates to combat high inflation and this would typically strengthen the currency involved.

On Thursday UK Retail Sales are announced and with the previous release having been affected by the ‘beast of the east’ I think we could see the data come out rather positively which could see GBPAUD rates recover towards the end of this week.

If you would like further information about what is happening with the Pound vs the Australian Dollar or if you’d like a free quote to buy or sell Australian Dollars then contact me directly and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

Could Australian dollar weakness could now be over?

The Australian dollar had been struggling in recent months as investors began to unwind trading positions that positioned the Australian dollar to be used for investors in carry-trades. The carry-trade is where investors borrow in a low yielding currency to invest in a high yielding currency. As sentiments change this has now been unwound presenting some big shifts in the currency markets.

With the US dollar now rising higher as they raise interest rates, and are expected to raise further, the US dollar is now attracting more investment. I feel therefore that the recent weakness on the Australian dollar which has now abated could have been the result of much of the more recent strength being eroded. This move of late which has seen the Australian dollar rising could now present some much better opportunities to sell AUD for well-prepared clients.

Some key evidence of this would stem from the RBA (Reserve Bank Australia) who are believed to be in a process of looking to raise interest rates longer term. The overall picture on the markets is now much more positive for the longer-term perspective for the raising of Australian interest rates. This would see the GBPAUD rate potentially dropping further which might see it hit closer to the 1.75 level in the coming weeks.

If you have a transfer buying or selling Australian dollars for pounds, please speak to me to discuss the requirements. Next week is some key news coming from the UK economy which might trigger some big movements on GBPAUD levels so any clients looking to buy or sell the Australian dollar should be prepared for a busy week.

For more information on the best rates and further market insight and strategy to maximise your position, please speak to me Jonathan Watson by emailing jmw@currencies.co.uk.

Thank you for reading and I look forward to hearing from you.

Australian Dollar Boosted on Employment Data (James Lovick)

The Australian dollar has been boosted following employment data which rebounded in April with another 22.6 k jobs added. Unemployment actually rose slightly to 5.6% from 5.5% although this was more to do with a higher participation rate and the markets appear not too concerned over this aspect. Australian consumer inflation expectations data also rose which is helping to support the Australian dollar. A higher level of inflation in reality would be one of the first triggers for the Reserve Bank of Australia to raise interest rates which lends support to the Aussie.

Rates for GBP AUD have fallen to below 1.80 creating a good opportunity to sell Australian dollars for pounds. Clients looking to convert from AUD into GBP may wish to consider taking advantage of the sudden improvement as the Australian dollar could find itself in deeper water depending on how events unfold with the trade tariff war between the US and China as well as more recent geo political risks in the Middle East. US President Donald Trump has only just pulled out of the Iran nuclear deal and there is likely to me a lot more mileage from this change.

Brexit is about to become hugely political and volatile for the pound in these coming weeks ahead of a vote in the House of Commons on a series of amendments put forward in the House of Lords. As of now a total of 14 amendments have been made in the Lords which will deliberately seek to keep Britain in a customs union. The risk for the pound is that there could be more political uncertainty that comes out of this if Theresa May is unable to get through her vision of Brexit in the House of Commons.

Should she lose the vote then we could be moving into general election territory or the prospect of a new Prime Minister. There could be some bumps in the road In the next few weeks which could create some better opportunities for those clients looking to sell AUD if political tensions escalate in the UK.

For more information on the Australian dollar and assistance in making transfers at the best rates of exchange then please get in touch with me at jll@currencies.co.uk

Australian Dollar continues to trade in a volatile fashion, will the currency continue to decline?

The Australian Dollar saw a slight rise yesterday against many of the major currency pairs, although this strength is being put down to AUD benefiting from traders buying against the Euro.

AUD being one of the biggest benefactors of Euro weakness has come at a good time for AUD, as it’s been losing value recently at quite a dramatic rate. The fall in the value of the Aussie Dollar has been welcomed by the Reserve Bank of Australia as they were concerned when the currency was considered overvalued. With the Australian economy being heavily export driven a weaker currency is a benefit as it will attract more business.

Those hoping for a stronger Aussie Dollar should consider this, as the RBA is unlikely to implement any policies to limit the weakening of AUD.

Earlier this week it was announced that wage growth is lagging down under, and it’s also been confirmed by the RBA that a rate hike this year is unlikely.

This leads me to believe that the Aussie Dollar will continue to drop in value, and I wouldn’t be surprised to see the AUDUSD 2-year low tested now that we’ve seen a 1-year low breached.

When compared with the Pound the Aussie Dollar has staged a slight fightback after hitting an almost 2-year low, but I consider the longer term trend to be downward also despite the UK’s political uncertainty.

If you have a large currency exchange to carry out in the coming days, weeks or months then you are more than welcome to speak with me directly as I will be more than happy to help you both with trying to time a transaction and getting you the top market rate when you do come to buy your currency. A small improvement in a rate of exchange can make a huge difference so for the sake of taking two minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can email me (Joseph Wright) on jxw@currencies.co.uk and I will endeavour to get back to you as soon as I can.

Wage growth puts further pressure on the RBA

This week Australia have released the latest quarterly wage growth numbers and Australian dollar sellers have been left disappointing. The consensus was for wages to have grown by 0.6%, however in fact wages had grown by 0.5% for the quarter. The poor wage growth numbers are keeping inflation beneath the Reserve Bank of Australia’s target which is directly having an impact on Australian dollar exchagne rates.

If wage growth numbers continue to dwindle along and inflation remains below the RBA target, policy makers will have no choice but to leave interest rates on hold at record lows and this is what many leading forecasters are predicting, which is no surprise. Speculators move their assets chasing higher returns of interest and with the US marching ahead and potentially looking to raise interest rate another couple of times this year investment is going to leave Australian shores and land in the US.

In regards to GBPAUD exchange rates the pound has been performing worse than the Australian dollar as exchange rates have dropped below 1.80. UK economic data has disappointing which has stopped the Bank of England from raising interest rates and the Brexit negotiations continue to weigh on the pounds value. Today UK Prime Minister Theresa May confirmed that the UK will release a whitepaper before the June summit which will outline the UK’s full position.

When the whitepaper is released this could have a clear indication about the future path of the UK and therefore GBPAUD exchange rates. If you are converting GBPAUD within the next 3 months this event should be monitored closely. 

If you are buying or selling Australian dollars in the future, I would strongly recommend getting in contact to discuss your situation. The company I work offers a proactive service to offering economic information whilst having the ability to offer award winning exchange rates. Feel free to email me with the currency pair you are converting, your requirements along with the timescales you are working to and I will respond with my forecast and the process of using our company drl@currencies.co.uk.

Australian Dollar weakens a little as U.S Bonds continue to rise – Poor wage growth continues to be an issue

The Australian Dollar has lost a little ground in trading this week with U.S Bonds being partially to blame for the latest bout of Australian Dollar weakness. The U.S treasury yield has recently hit its highest level in 7 years and the reason this is impacting the Australian Dollar is that this is causing a large flow of money to come back out of the Australian Dollar and into the U.S Dollar, making USD more expensive to buy and AUD a lot cheaper.

Over the past few years we have seen interest rates continue to rise in the U.S and remain stable in Australia and now that the USD is seen as a more attractive and less risky investment investors are starting to make their moves and to shift money back into the Dollar.

It does not look like we will be seeing a move from the RBA to raise interest rates until next year now which in my opinion will continue to hold the Australian Dollar back. Poor wage growth figures matching the 1.9% inflation figure released have shown that workers have not seen any growth in their wages for the past year and wage growth levels are currently sat very close to historic lows.

What this means is that the general consumer has less money in their pocket to spend and therefore this can impact the economy further. It also will hold back the Reserve Bank of Australia from raising interest rates as a move to hike rates now would put homeowners under pressure, so they really are stuck at the moment as to what is the right thing to do.

I believe the RBA will continue to monitor data before rushing anything, but the signs are there for me that we may see a little Australian Dollar weakness in the coming months.

If you are in the position that you need to carry out a currency exchange involving Australian Dollars and any other major currency then you are more than welcome to get in touch with me and I will be  happy to help you personally. The brokerage I work for has been operating for 18 years now and we pride ourselves on getting clients not only the best exchange rates on the market but also offering the very highest level of customer service too.

If you would like to discuss a specific scenario or exchange with me then feel free to email me (Daniel Wright) on djw@currencies.co.uk and I will be more than happy to get in touch personally.