Daily Archives: October 1, 2012

What will happen with Australian Interest Rates? GBPAUD Exchange rates

With the RBA meeting tomorrow the Australian Dollar vs Sterling exchange rate has stayed range bound between 1.5537-1.5607 on the mid-market price as all eyes are focusing on whether or not the RBA will cut interest rates. As you may have read on my article recently I think as the RBA presents the discussion live I’m inclined to say they will cut interest rates at tomorrow’s meeting which could see a sharp sell off of Australian Dollars providing some good short term buying opportunities.

News of Eurozone unemployment hitting an all time high of 18.2mn in August has done little to affect the exchange rates of the AUD as it eagerly awaits the announcement tomorrow. Indeed, with unemployment in Spain hitting above 25% it is difficult to see the region improving in the short term. There seems to be have been a large amount of carry trading in the last couple of years which means borrowing in a low yielding currency to invest in one with a higher interest rate so if there’s cut at the meeting we could see a reversal of AUD positions.

Greece has also predicted that its economy will shrink by 3.8% next year which will be the sixth year in a row. The cuts are necessary if the country wants to continue with its bailout. Currently €8bn worth of cuts have been proposed for 2013 which includes public sector, pensions and welfare.

For further information as to how an interest rate change may affect your currency requirement please do not hesitate to contact me directly. If you have an opinion as to what may happen tomorrow I would welcome your thoughts too. Contact me Tom Holian teh@currencies.co.uk