Trade Wars and Brexit dictate GBP/AUD (Daniel Johnson)

GBP/AUD – GBP/AUD currently remains range bound between 1.75-1.80. The outlook for both currencies is not necessarily the best. The Australian Dollar will find it hard to find a momentum due to the ongoing trade war between China and the US. Australia has a heavy reliance on China purchasing it’s exports, particularly iron ore. The tariffs imposed by the Trump administration are quite severe and with China threatening to match US tariffs Dollar for Dollar this will hit both economies hard and in turn the Australian Dollar.

During times of global economic uncertainty investors tend to avoid commodity based currencies in favour of safe haven currencies. Despite the US initiating the trade war, the US Dollar is proving to be the destination of choice. 10yr treasury bonds currently offer the best returns seen in years and the Federal Reserve have the intention to hike interest rates a further two times by the end of the year.

I feel the trade war with China could be sustained despite the US holding the majority of the cards.

From the UK side, Brexit negotiations will be key the the value of Sterling. Theresa May’s Brexit proposal has taken criticism as it goes against how Brexit was sold to the public.

The proposal includes a free trade deal for goods and agricultural products. This would essentially keep the UK’s rules and regulations aligned with those of the EU. This would allow trade in goods to flow freely and the Irish border would remain open.

The proposal for services however will be different. The UK would like to take back control of services, particularly the financial sector. Services make up 80% of UK GDP. This would result in more barriers for companies’ trading aboard.

The risk of course is that financial services will move abroad. This is a serious concern as the tax income from the financial sector is huge. May intends to reform the existing equivalence regulation where temporary customs union access is granted, but can be removed at anytime. This situation does not fill me with confidence.

Merkel has apparently agreed to a deal behind closed doors.

If the trade war escalates then we could see GBP/AUD breech 1.80 although I do think this would be a long shot. aim to trade in the 1.79s if you have an Australian Dollar requirement.

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 16yrs, 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 . (Daniel Johnson) Thank you for reading.

 

Australian dollar volatile under Trade War and Chinese economic data releases…

The Australian dollar will take its cues early next week from a series of economic data released in China, notably Chinese GDP (Gross Domestic Product) data released very early in the morning on Monday. News from China is very important on the Australian economy and there is no bigger release than GDP since it shows how well the respective economy is performing.

This news is all the more important given the current Trade Wars between China and the US, we are currently facing renewed prospects of increased tariffs which would in most eyes only serve to have a negative effect on the Chinese economy. Surprisingly, against this backdrop we have seen a series of economists for Reuters predict the Chinese economy will actually grow at a slightly faster pace this year.

This is because whilst the Chinese economy could be negatively impacted by the Trade Wars, the momentum in their economy and also the moves by the PBOC (People Bank of China), the Chinese central bank, to stimulate the economy, will all help to stimulate growth in Asian dragon. This will all help to see the Australian stronger if it happens and it will make an interest rate hike down under all the more likely.

Later next week the release of Australian Unemployment data will also prove very interesting for Australian dollar exchange rates, clients looking to buy or sell might find themselves with fresh information to move the rates. Of particular interest would be whether the Unemployment level is likely to have increased to 5.6% versus the previous levels of 5.5%. This would make it less likely we will see the RBA (Reserve Bank Australia) putting themselves on a path to hiking in the future.

The week could start strongly for the Australian dollar if the economic data from China is supportive of the Australian economy, however, it might weaken towards the end of the week if the news is less positive. Into the mix we have to put Donald Trump and the Trade Wars, with his comments at Nato and also in the UK upsetting many, his upcoming visit to Putin next could see some volatility on exchange rates as the market tries to gauge what happens next.

If you are considering any purchase or sale of Australian dollars, next week could be very important as a series of data and news threatens volatility on the currency. To discuss strategy relating to any positions, please don’t hesitate to get in touch with me directly on jmw@currencies.co.uk.

GBP/AUD – Sterling stands strong depsite Davis resignation (Daniel Johnson)

GBP/AUD – The progress in Brexit negotiations is key to the value of GBP/AUD. The resignation of chief Brexit negotiator David Davis does not bode well for Sterling.

After Theresa May released her intentions for Brexit David Davis announced he thought the deal was “unworkable” and has subsequently resigned. Angela Merkel has also stated the deal is unworkable.

Despite this the Pound remained robust against the Aussie and we did not see any significant falls. This can be attributed to positive UK data, namely Services Purchase Manager Index (PMI) which came in at 55.1, the highest since October 2017. This is significant as Services makes up around 70% of UK GDP.

There is also of course the ongoing trade war with China and the US which is certainly putting off investors moving to the Australian Dollar. Commodity based currencies are not as popular in times of global economic uncertainty. China is the biggest purchaser of Australian goods and services and Chinese growth will be hindered by the trade war. This in turn will hit the Australian economy.

Despite the US initiating these trade wars the US Dollar continues to gain strength as investors seek a safe haven currency with high returns. The Fed has hiked interest rates on two occasions this year ant there is set to be more. Ten year treasury bonds currently have the highest returns in over four years.

GBP/AUD is currently range bound between 1.75-1.80. AUD buyers aim to move when interbank hits 1.79.

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

 

 

Australian Dollar Poised for Volatility after US Tariffs are Enforced (James Lovick)

The Australian dollar is now set for a volatile period after US trade tariffs on Chinese goods kicked in this morning as planned. The Australian dollar as a commodity currency is likely to be sensitive to any further escalations in these trade wars and the dollar could come under considerable pressure. $34 billion worth of tariffs have been imposed as of today and China has already reciprocated. US President Donald Trump has signalled his intent to increase these tariffs to as much as a staggering $450 billion on Chinese products if China retaliated.

It will now be interesting to see the response from the US after this retaliation and where this heads next. The EU has also been embroiled into these trade disputes highlighting how big an issue this all is. If global economic growth falls in the future then the Australian dollar is likely to be one of the hardest hit.

GBP AUD

Today marks a hugely important today for those clients looking to buy or sell Australian dollars with pounds. British Prime Minister Theresa’s May will be holding a cabinet meeting at Chequers to finalise the detail on Brexit and how close Britain will be aligned to the EU. There has been much disagreement within her cabinet and today should give guidance as to whether Britain will pursue a soft or a hard Brexit. The pound is likely to react accordingly and this meeting does have the potential to cause some fireworks.

No details have yet been released but the outcome of today’s meeting will form the basis for a white paper on Brexit. A softer Brexit that maintains trade and one that is likely to be agreed by the EU is likely to see the pound rally. However any resignations or objections from within government could create even more uncertainty for sterling exchange rates. Clients would be wise to plan around this event as we could finally be at the tipping point.

For more information on the Australian dollar and for assistance in making transfers at the opportune time then please get in touch with me James at jll@currencies.co.uk

Positive tone from the RBA leads to Australian Dollar strength overnight

The Australian Dollar has had a fairly solid 24 hours or so following on from the RBA (Reserve Bank of Australia) interest rate decision overnight.

No changes to interest rates were made and the interest rate level remained at 1.5% for the 23rd consecutive month, however it was the tone of the RBA that sparked the strength for the Australian Dollar against most majors.

The Australian Dollar has been one of the top performers of the trading day due to the outlook going forward. Currencies quite often move on speculation as well as fact, and many analysts had been expecting another fairly damp overview from the RBA meeting minutes.

What they actually received was a fairly positive report, citing that they now expect wage growth to improve and in fact that they felt that this had now troughed, and with reports of skills shortages in certain areas there is now an expectation from the RBA that wage growth will start to naturally rise and this should drag the economy up with it.

The Australian economy has had a mixed year so far, whilst there has been nothing to panic about the economic data that has been released has not exactly been fantastic, and throw into the mix the issues with Donald Trump with Trade Wars and the potential issue over North Korea earlier in the year and you can see just why the Australian Dollar has had a shaky 6 months.

Political tensions and larger global problems can also weaken the Australian Dollar as it is perceived as a ‘riskier’ currency, so global issues can decrease investors attitude to risk and therefore weaken the Australian Dollar when they occur.

There is little to come out in terms of Australian data in the coming days, but for those of you looking to carry out an exchange involving the Australian Dollar then non-farm payroll data in the U.S on Friday, which measure employment in America will be your next one to watch, as this can also impact global attitude to risk.

Should you need to carry out an exchange involving Australian Dollars and you would like to maximise your exchange then feel free to contact me (Daniel Wright) directly and I will be able to assit you with the timing of your transfer and ensuring that you get a great rate of exchange too. Feel free to email me on djw@currencies.co.uk and I will be more than happy to contact you personally to discuss the options available to you.

US Trade Wars to hurt the Aussie (Daniel Johnson)

How will the ongoing Trade Wars effect AUD?

Trump is  fighting trade wars on several fronts. He is unhappy with the trade deals currently in place with the EU, China and the US and is also renegotiating the North American Free Trade Agreement (NAFTA) involving Canada and Mexico.

The US has been imposing tariffs on all fronts, with the tariffs of choice being steel and aluminium. The tariffs placed on China could prove particularly detrimental to the Australian economy due to Australia’s heavy reliance on the Chinese purchasing it’s raw materials. The tariffs could hit Chinese growth which would cause a change in demand and price for Australia’s raw materials, particularly iron ore.

Global economic uncertainty is causing investors to move away from riskier commodity based currencies such as AUD in search of safe haven investments. Despite the US being at the centre of the ongoning trade wars. It is proving to be the destination of choice for investors. Interest rate levels are impressive and there is predicted to be several more hikes from the Fed this year. Ten year treasury bonds are also offering some of the highest returns in years.

Personally I feel China is in a trade war that cannot be won. If they intend to match US tariffs Dollar for Dollar they would need to impose tariffs on all US exports which is simply not feasible and would hit both economies hard. This would in turn have repercussions on the Aussie.

GBP/AUD -Sterling remains fragile due the lack of clarity on access to the customs union. There is due to be a proposal put forward from Theresa May to her cabinet at Chequers on Friday. If the proposal is accepted on the third attempt Brexit negotiations can move forward and the proposal can be presented to Brussels.

If the proposal is initially accepted on Friday you can expect Sterling strength. Personally if I was buying Australian Dollars short term I would be moving in the 1.79s. 1.80 is proving to be a resistance point.

If you have a currency requirement I will be happy to assist. If you let me know the details of your trade I will endeavor to produce a free trading strategy. During a period of such uncertainty it is important to be in touch with an experienced broker if you wish to maximize your return. We have tools at our disposal to make sure you do not miss out if there is a spike in your favour.
If you already have a currency provider in place. Drop me an email with what you are being offered and I am very confident I will be able to demonstrate a significant saving. It will only take you two minutes and I am sure it will be worth your while. You can trade in safety knowing you are with a Foreign Currency Direct PLC, a firm trading for over 16yrs and FCA registered.

If you would like my help feel free to email me at dcj@currencies.co.uk.

Thank you for reading.

UK GDP gives the pound a boost vs Australian dollar

This morning at 9.30am UK Gross Domestic Product numbers were revised to 0.2% from 0.1% for quarter 1 which has given the pound a boost against the Australian dollar. The Bank of England in recent weeks have been hinting that an interest hike could occur as early as August and the improvement in GDP certainly helps the cause. For Australian dollar buyers rates have improved by 0.5%.

Another reason why the pound has been making progressive gains against the Australian dollar is that the Aussie has been weakening due to the trade war between the US and China. The US is Australia’s most important defence ally and China the most important trade partner, therefore Australia are stuck between a rock and a hard place. The theory behind it is that further tensions will put further pressure on the Australian dollar and therefore I would expect GBPAUD to break through 1.80.

In other news the EU summit is now over, and the message from the EU is that the UK need to make progression fast. UK Prime Minister Theresa May has called a meeting at her Cheques country side retreat,  and the full cabinet will attend. The rumour on the market is that Theresa May could announce a soft approach which will be outlined in her white paper which should be released early July. I expect this may give the pound a small boost.

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 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.

 

 

US-China Trade War causes investors to lose confidence in AUD

GBP/AUD – The pound has made gains against the Australian Dollar of late, predominantly due to investors looking for safe haven investments due to the ongoing trade war between China and the US. Beijing has said it will match US tariffs Dollar for Dollar which is a risky game considering Trump has promised further tariffs if there is Chinese retaliation. US officials are already preparing $100bn in additional tariffs should the Chinese go through with the rumored retaliation.

US total exports to China last year were an impressive at $130bn. A like for like retaliation from the Chinese would have to cover all US exports which could be very detrimental to China.

Due to Australia’s heavy reliance on China purchasing it’s raw materials the Australian Dollar has been losing value. The tariffs could hamper Chinese growth which is causing investor confidence to move away from riskier commodity based currencies.

Bank of England Interest Rate Outlook – Last week we saw the the Bank of England (BOE) interest rate decision, rates were kept on hold, but it appeared a rate hike was drawing closer. The Monetary Policy Committee (MPC) voted 6-3 against a hike which was up from the previous month 7-2. The markets reacted and we saw Sterling make gains against the Aussie.

Current polls are suggesting over a 50% chance of the BOE raising interest rates by 0.25% at the August meeting, and over 90% chance of a hike happening before the end of the year. I am not so convinced, one of the MPC members to vote in favour of a hike Ian McCafferty  is to be replaced by the more dovish Jonathan Haskel. It is unlikely Haskel will vote in favour of a hike in August and this could push a hike further down the road. In fact considering current economic data I do not think a rate hike will be  justifiable this year.

I am of the opinion Sterling is chroincally undervalued due to the lack of clarity surrounding Brexit, but short term there is very little reason for Sterling to make any substantial gains.  1.80 is currently a resistance point although it is being tested, personally considering the current economic situation if  GBP/AUD is in the 1.79s you are in a good position to trade.

If you have a currency requirement I would be happy to assist. If you wish to maximise your return it is important to be in touch with an experienced broker. If you let me know the details of your trade I will endeavour to produce a trading strategy to suit your needs. If you have a currency provider in place I am willing to perform a live comparison and I am confident I will be able to demonstrate a considerable saving. It will only take  a couple of minuites and could be well worth your while.

You can trade in safety knowing your trading with Foreign Currency Direct PLC, a company  trading for over 16 years. Our accounts are published online at companies house and we are FCA registered.

If you would like my help I can be contacted at dcj@currencies.co.uk. I look forward to hearing from you.

 

 

 

Will the Pound hit 1.80 this week against the Australian Dollar? (Tom Holian)

Sadly the Australian football team’s time at the World Cup has been cut short and similarly with the currency side of things the Australian Dollar has also struggled during the course of the last month as well.

The Trade Wars between the US and China has caused a big problem for the Australian Dollar as China is Australia’s largest trading partner so any negative news will often result in Australian Dollar weakness.

At the moment threats are that the US could impose as much as US$200bn on Chinese goods and this is causing a very big problem for global trade and as the Australian Dollar is a commodity based currency this has been badly affected in the same way as both the South African Rand and the New Zealand Dollar.

GBPAUD exchange rates have been heading in the direction of 1.80 but appear to be hitting a level of resistance just below at the moment. However, I think we could see the Pound rise higher going into next month.

The EU summit will be taking place over the next couple of days and as well as the migrant crisis one of the other main topics for discussion will be the latest developments surrounding the Brexit issue and how the EU will work without the UK.

If the talks go well for the UK we could see the Pound potentially break higher than 1.80 against the Aussie Dollar so make sure you’re well prepared to take advantage of any potential spikes in the Pound’s favour.

We end the week with the final revision of UK GDP figures for the first quarter of 2018 so any revision upwards could also send the Pound in an upwards direction.

If you have a currency transfer to make and would like to save money when exchanging Australian Dollars then contact me directly for a free quote and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

Australian Dollar Weakens on Trade War Escalations (James Lovick)

The Australian dollar has come under a recent wave of pressure losing ground across most of the major currencies this week. The Aussie has lost more than 4% over the last month with a noticeable fall against the US dollar. The Reserve Bank of Australia (RBA) are keeping all option open with regards to interest rate policy and the wording of whether or not interest rates will rise or fall in due course. However the RBA Governor Philip Lowe has indicated that he expects rates to rise and this was made clear when he last spoke.

The reason for the Australian dollars weakness is most likely due to the trade war escalations between the US and China. Whilst I have previously commentated that trade links between Australia and China are very strong and that Australia could be shielded by protectionist behaviour the recent escalation in tariffs is now having a detrimental effect on some of the other commodity currencies such as the Aussie. There is currently a better opportunity to buy Australian dollars.

The concern is that if global growth slows due to a trade war then the riskier currencies likes the Aussie are likely to feel the full force of slower growth and should see their respective currencies weaken. For the moment it’s all eyes on these developments and Trump had really signalled that he would seek to impose another $100 billion of tariffs on Chinese exports if there was like for like retaliation. Expect more developments form this story and potentially additional losses for the Aussie.

GBP AUD

Brexit continues to be the main driver for GBP AUD exchange rates and should see a volatile period ahead with the EU summit next week. British proposals on the future relationship should be made public very shortly and are likely to appear after the EU summit. The response form the EU as to progress so far will be very important for the pound and any escalation in tensions or the
potential for a no deal scenario is likely to result in sterling weakness. There is still an excellent opportunity for clients looking to sell Australian dollars. In my view once a deal thrashed out then the pound should strengthen materially. Although there is a risk of a no deal scenario which would be sterling negative, in my view this does not seem the most likely outcome and I am bullish for the pound in the medium term.

To discuss how these events will directly impact on your own currency requirement and how to achieve the best rates of exchange then please get in touch with me James at jll@currencies.co.uk