Will the Australian dollar weaken this week? RBA Meeting Minutes are key

Tomorrow is the latest RBA, Reserve Bank of Australia meeting minutes. Investors are closely monitoring this for any news that we could well see key changes in the outlook for the Australian dollar, as the RBA responds to the change in economic outlook for both the global economy and the domestic Australian economy.

Pressures are mounting on the RBA to be more conscious of a consideration for a more dovish, or soft interest rate policy as investors seek to gauge the likelihood that up ahead interest rate cuts will become much more necessary for the Australian economy. China is Australia’s largest trading partner and the market is of the belief continued economic troubles will see the Australian economy suffer, and therefore need to cut rates ahead.

The raising and lowering of interest rates is a big factor in the currency markets, as investors seek to position themselves in a currency which they believe will ‘yield’ a higher return. For example, the higher an interest rate, the stronger generally a currency will be. It is similar to the way that a higher interest rate will attract investment into a savings account.

Likewise, when an interest rate is cut, or investors believe that it might be up ahead, the currency will lose value. This is because it makes the currency less attractive to hold by those concerned with a stronger investment. Such is the case with the Australian dollar at present, as a lower interest rate prediction makes the currency less attractive to hold by investors.

Moving forward, the RBA and Australian economic data will face tough scrutiny as the market gauges the likelihood of the future cuts in the rate. Clients with a position to buy or sell Australian dollars might benefit from a quick review with our team to ensure they are fully up to date with what lies ahead, and how they might benefit from the volatility.

Thank you for reading and please get in touch if there is anything that you wish for us to run through or discuss, relating to a transfer of Australian dollars.

Jonathan Watson

jmw@currencies.co.uk

GBP/AUD – Where Next? (Daniel Johnson)

Brexit Extension

Since December the Pound has been losing value against the Australian Dollar. Sterling reached its highest level against the Aussie yesterday since the 2016 referendum. This was following the news that a Brexit no deal had been taken off the table until 29th March combined with the news that MPs have now voted to extend Article 50 in order to come up with a mutually acceptable deal between the UK and the EU.

The Australian economy is currently experiencing problems which is proving to be another catalyst for the rise in GBP/AUD. Consumer confidence, business confidence and housing loans data all showed a decline. Australia’s heavy reliance on China purchasing it’s goods and services is hurting the Aussie as Chinese growth, although still impressive has slowed quite considerably since the US/China trade war commenced. It was announced yesterday that China’s industrial output fell to its lowest level in 17 years during the first two months of 2019, unemployment has also been on the rise. There is the potential that Chinese President, Xi JinPing and US President, Donald Trump could come to an agreement at the end of the month and cease tariffs which could boost investor confidence and in turn strengthen AUD.

Will the RBA minutes give an insight into future Monetary Policy?

Although Brexit will continue to be the key driver on GBP/AUD there are plenty of other factors that can have an impact on the currency pair. On Tuesday morning, during the early hours the Reserve Bank of Australia (RBA) will release minutes following the recent interest rate decision where rates were kept on hold at 1.5%. The RBA have already hinted at potential rate cuts and if this is mentioned again we can expect further Australian Dollar weakness.

Next Thursday has the potential to cause market movement with the release of RBA Bulletin and unemployment figures for February. If the data arrives away from expectation expect volatility.

Personally, I think the Aussie could be in for a tough time due to the increasing problems surrounding the economy, I haven’t even touch on the housing price bubble. If it is announced there is a deal on the Irish Border I would expect significant Sterling strength. I feel Pound is currently chronically undervalued. If I was sitting on Aussies I would not be hanging around for improvements considering risk versus reward.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker when the market is currently so hard to predict. If you let me know the details of your trade I will endeavour to produce a free trading strategy to suit your individual needs. Have faith knowing you will be dealing with a brokerage in business for over 18yrs, Foreign Currency Direct Plc. We are a no risk entity as we do not speculate on the market and we are registered with the FCA. If you have a currency provider take a minute to send over the rates they offer and I am confident I can demonstrate a significant saving. I can be contacted at dcj@currencies.co.uk .

 

 

 

 

 

No to a no deal Brexit and the impact on the Australian Dollar

The Pound has hit a 2 1/2 year high against the Australian Dollar after the House of Commons voted in favour of saying no to a ‘no deal’ Brexit.

MPs will now be voting later on today to ask the European Union for permission to delay Brexit after the 29th March which is the the current expected date when the UK is due to leave the European Union.

Owing to what happened last night, once or indeed, if an extension is granted this could carry on for a long period of time according to Prime Minister Theresa May.

The Pound has moved in an upwards direction against a number of different currencies including against the Australian Dollar and we could see further gains later today if the vote goes the right way.

Theresa May has also warned that if her deal is not voted through next week then an extension would need to be very long and I think this could provide the Pound with support as it means trade with the UK can breathe a sigh of relief at least for the foreseeable future.

In my opinion the longer the negotiations last means that I think negotiations will continue to be in stalemate and this could inevitably result in a call for a second referendum.

Clearly there is little appetite at the moment for this to take place but if there is no headway made over the next few months with the talks then this could be one of the only options left.

The Australian economy is feeling a lot of pressure at the moment owing to the slowdown in China with Chinese GDP at 6.6% which is the lowest level in 28 years.

Australia is heavily reliant on Chinese demand and with Australia exporting a third of their goods to China then any slowdown will typically have a negative impact on the value of the Australian Dollar and this is what appears to be happening at the moment.

Having worked for one of the UK’s leading currency brokers since 2003 I am confident of being able to save you money on exchange rates compared to using your own bank then contact me directly for a free quote and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

Could the Australian dollar weaken further?

The Australian dollar has been weaker in the latest few weeks as investors fears over the Trade Wars remain, plus the expectations on the RBA, Reserve Bank of Australia, increase to potentially cut the interest rate in the future. There has been a growing expectation that perhaps the Australian central bank has been under estimating the extent to which they would need to cut interest rates in the future, based on the ever-changing global developments. If you are looking to buy or sell Australian dollars in the coming days and weeks an awareness of all of these options and outcomes is sensible.

The market is looking like it could be in for a rollercoaster ahead for the Australian dollar as a series of events develop overseas and at home to trigger volatility. One of the key aspects of the Trade Wars is that in disrupting global trade, they are putting pressure on the global economy which will ultimately lead to a weaker Australian currency. Australia’s economy is heavily reliant on the global economy performing well which will support strong demand for the export of their raw materials.

Overall, there is a belief that the Australian dollar is destined to lose value over the longer term, this is evidenced by its recent weakness which will only continue should the market continue to be faced with the evidence of a slowing global economy.

There is important economic news ahead for the Australian dollar with key information released this week on Consumer Inflation Expectations and National Australia Bank Business confidence figures. This will all be seen in the light of the ongoing developments with the US and China trade wars which had been more positive, but just lately have seen uncertainties creep back.

If you have an important currency transfer to make, being prepared is key in this market where events can quickly and suddenly change and unfold. If you would like to run through or discuss the market or our services, then please do not hesitate to get in touch to discuss further.

Thank you for reading and please contact me Jonathan on jmw@currencies.co.uk.

GBP to AUD Rates before Brexit Votes in Parliament this Week (James Lovick)

The pound to Australian dollar has been performing well in recent weeks with rates testing the 1.85 levels for the GBP to AUD pair. However the pound has weakened as concerns over Brexit continue to dictate the direction of travel. There is currently a deadlock in the ongoing Brexit negotiations with a breakdown in talks with no compromises being made over the contentious Irish backstop. The UK attorney general Geoffrey Cox and Brexit Secretary Stephen Barclay have been unable to find common ground over the weekend ahead of a meaningful vote to be held in parliament on Tuesday.

With no changes to the backstop it seems almost certain that the Prime Minister will be unable to get through parliament the current withdrawal agreement. It leaves the pound on shaky ground with so much riding on the outcome of Tuesday’s vote. If the vote does not pass then a further two votes are to be held on Wednesday or Thursday and these will determine if there is to be a no deal Brexit or if there is a majority in parliament to delay Article 50. This week represents one of the biggest weeks in British political history and there is likely to be substantial market volatility for GBP vs AUD depending on the outcomes of these events.

Home loan data down under should make for an interesting start to the week with concerns still hanging over the Australian property market. Property prices have been falling in the major cities as a result of global economy concerns as well as domestic rules on lending standards. Australian home loans took a nose dive last month with a drop of -6.1% highlighting a significant drop in the market.

The consensus is for a climb to 1% which could help reassure the market and may help boost the Australian dollar. With the full effect of the trade war yet to be felt then the housing market in Australia may have further to fall which could paint a bleaker outlook down under.

Those looking to buy or sell Australian dollars would be wise to plan around this week’s major political events in the UK. For more information on how to tackle the exchange then please feel free to contact me James at jll@currencies.co.uk

Will the Pound increase after the Brexit vote next week?

The Australian Dollar has continued to struggle recently against the Pound hitting the best rate to buy Australian Dollars since June 2016 this week.

Since the lowest point in December the Pound has improved by as much as AUD14,500 on a currency transfer of £100,000 highlighting the importance of keeping up to date with current events both in the UK and Australia.

The Reserve Bank of Australia have continued to remain in a rather neutral position concerning monetary policy by keeping interest rates on hold earlier this week.

The Australian economy has continued to show signs of concern during recent months and this is clearly being reflected in what is happening with the Australian Dollar at the moment.

The Australian economy is also heavily reliant on both growth and demand in China and with the world’s second largest economy slowing down this is causing the Australian Dollar to weaken.

Problems with coal coming in to China from Australia have hit the headlines recently and it appears to be only directed at Australia rather than other countries who trade with China so is this a political move by the Chinese who are maybe punishing Australia for their support to the US concerning the recent Trade Wars between the US and China?

Turning the focus back towards what is happening in the UK and we have a number of key votes due to take place in the House of Commons surrounding Brexit.

On March 12th the House of Commons will hold their ‘meaningful vote’ about what MPs think of the current Brexit deal on offer. The likelihood is that it will be voted against and this means the following day will see a vote on whether or not MPs will back a ‘no deal’ Brexit.

Therefore, I expect a huge amount of volatility on GBPAUD exchange rates and could this see the Pound break past 1.90 against the Australian Dollar.

I have worked for one of the UK’s leading currency brokers for over 16 years and I’m confident that I can save you money on exchange rates compared to using your own bank so if you would like a free quote then contact me directly and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

 

 

 

AUD Forecast – Australian Economic Output Continues to Heap Pressure on the AUD (Matthew Vassallo)

The AUD has been under growing pressure of late, with the Pound finding plenty of support above 1.85.

Australia’s economy remains stagnated, with concerns over global trade and uninspiring growth figures, handicapping any sustainable advances for the AUD.

This period of relative economic downturn is causing investors to shy away from the AUD, which like all commodity-based currencies is struggling to maintain its levels, due to investors risk appetite being minimal.

Yesterday’s Gross Domestic Product (GDP) figures, along with last night’s Retail Sales figures are likely to reinforce this negative undertone, although the silver lining for those clients holding AUD is that the poor figures have not yet caused the AUD to slip further against GBP.  GDP figures showed a drop to 0.2% month on month and whilst Retail Sales data showed an improvement from last month’s reading of -0.4%, they still came out under the markets expected result at 0.1%.

It is no real surprise then that the Reserve Bank of Australia continue to hold interest rates at their record lows of 1.5%. This is also causing the AUD to be less attractive to investors, who in years gone by would have looked at Australia’s previously high interest rates as an opportunity for a high yielding return on their funds.

Whilst the current climate is hardly like to inspire longer-term confidence in the Australian economy, things could be set to get wore before they get better.

One of Australia’s largest banks Westpac recently release their economic forecast for the rest of the year, in which they predicted the RBA would cut interest rates again, possibly twice by November. If this scenario comes to fruition, interest rate should fall to new record lows of 1%. This in turn will likely have negative ramifications for the AUD.

Whilst the UK continues to try and find some common ground with the EU in regards to the Irish backstop arrangement, as of yet, no breakthrough has been made. With the second “meaningful vote” fast approaching, UK Prime Minister Theresa May is running out of time to push through the amendments she will need, in order to convince parliament to vote in favour of her Brexit deal.

The markets focus will remain firmly on the UK ahead the current Brexit deadline of March 29th but any breakthrough in talks with the EU and a positive outcome to next week’s vote, is likely to drive investor confidence in the Pound and a move up to and even through 1.90 is certainly a feasible outcome.

If you have an upcoming AUD currency transfer to make, you can contact me directly on 01494 787 478. We can help guide you through this turbulent market and as a company, we have over nineteen years’ experience in helping our clients extract the most from any given market.

Our award winning rates can be accessed very easily over the phone and I can keep you posted with key market developments ahead of any prospective exchange you need to make.

Feel free to email me directly on mtv@currencies.co.uk to find out all the options available to you ahead of your currency transfer.

Australian dollar outlook : Will the RBA cut interest rates?

The Reserve Bank of Australia has been predicted to be cutting interest rates in the future, despite not so far making any firm inroads into the plans. Their Tuesday interest rate decision saw the Australian central bank confirm that they are taking note of the recent shifts globally but that it has not shifted their current outlook on interest rates.

The currency markets are however quite sceptical over this seem to feel that in fact the RBA will be forced to cut sooner than later. Global growth has slowed and despite some apparent respite in the Chinese to US Trade Wars, the market seems to think there is more chance of the Australian interest rate being lowered in the future. Expectations are rising that the global economy will slow in the future and and a commodity based currency, the Australian dollar will suffer.

The Australian dollar will rise and fall on the alternating prospects in the global economy, the current belief is that the general trend lower will continue. Of particular concern is the outlook for China where the market is finding concern over what lies ahead. The Chinese economy is suffering as investors face difficulty over what lies ahead and continue to predict a longer term decline of the Chinese economy.

Investors face many challenges in 2019, not least with the rising uncertainty over the negative outcomes from the Trade Wars, which will only see further uncertainty in the future on global trade. Clients with a position to buy or sell Australian dollars should it appears be gearing themselves up for a potentially weaker Australian dollar in the future.

If you have a possible transfer and wish to get an update on the latest news and information concerning the Australian dollar and what might lie ahead, then please do not hesitate to get in touch to discuss this further. We have a range of tools and options to help you to maximise your position, please email me Jonathan Watson on jmw@currencies.co.uk.

GBP to AUD Strength – Brexit Imminent (James Lovick)

The pound to Australian dollar exchange rate has rallied higher with rates for the GBP vs AUD pair sitting above 1.86. Brexit continues to dictate the direction of travel for GBP AUD and the more optimistic mood on reaching a deal is helping to support the pound. The markets have begun pricing in the prospect of a deal being reached by 29th March and failing that there is a chance that an extension of Article 50 may be required. Either outcome gives more certainty in the markets as to what the economic picture looks like for the next 18 months.

What is important to highlight is that the chances of a no deal Brexit are looking less likely which is seen as positive for sterling exchange rates. Meetings between Brexit Secretary Stephen Barclay and Attorney General Geoffrey Cox and their EU counterparts resume today seeking to find legally binding changes to the contentious Irish backstop. Any breakthroughs this week could help lift the pound higher although to date there haven’t been any offerings from the EU to suggest a compromise is in the offing.

The hugely important meaningful vote is to be held before 14th March and the outcome should present considerable volatility for GBP to AUD. If the government is unable to push the vote through then the pound faces another uncertain two consecutive days as more votes will be held in parliament. Bank of England Governor Mark Carney will be speaking later today and any negative comments which he is known for especially when it comes to Brexit could see the pound come under pressure.

The Australian dollar could be set for a big boost in the weeks ahead depending on how the ongoing trade talks between the US and China unfold. Reports have emerged that the two sides are close to making a deal which should be seen as positive for the commodity currencies including the Australian dollar. A future US trade deal which will remove all of the already imposed tariffs and barriers to trade should be seen as welcome news for the global economy. In turn this bodes well for the Australian dollar due to the large volume of exports of its commodities. When the global economy performs in theory so should the Australian dollar.

For more information on the Australian dollar and how these events have a direct impact on your own currency transfer then please feel free to contact me James at jll@currencies.co.uk and I will be happy to assist.

RBA expected to keep rates on hold, but could GBP/AUD see further gains this week?

Over the past week we’ve seen the GBP/AUD rate hit the headlines after the rate hit an almost 3-year high. With Brexit now just a few weeks away the Pound has defied many expectations and strengthened across the board of major currency pairs with GBP/AUD hitting 1.8732 at its highest point. At the time of writing the pair remain north of 1.87 on another strong start for the Pound so I wouldn’t be surprised to see the current 52-week high of 1.8732 tested again, if not today perhaps later this week.

Sterling has been climbing since the path for Brexit became clearer, and a number of MP’s have suggested they could support the Prime Ministers Brexit deal when the next vote takes place. The next meaningful vote will take place on the 12th of this month and after Theresa May lost the last key vote on this matter by a record margin I expect all eyes to be watching the Pound and the outcome of the vote on the 12th.

This evening UK time the Reserve Bank of Australia (RBA) will announce their next interest rate decision. No changes are expected from the record low of 1.5% but the comments afterwards from the RBA could impact AUD exchange rates so it’s worth being aware of this release as the last time the RBA made some dovish comments and indicated that there could be further cuts we saw the Aussie Dollar sold off.

I expect political updates from the UK especially regarding Brexit to remain the main drivers of currency fluctuations owing to the Brexit being just a few weeks away now.

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.