Monthly Archives: November 2012

Will the AUD continue to strengthen?

The Aussie Dollar has for a very long time been going from strength to strength following China’s rapid growth and their demand for Australian resources. However, in light of a recent report published by the OECD (Operation for Economic Co-operation and Development) has suggested that a global recession in the next two years cannot be written off. Therefore, a risk of a double dip recession for many countries could be likely and therefore have a negative impact on the Australian Dollar in the long term.

The ongoing uncertainty of what may happen in the Eurozone and the US Fiscal Cliff talks could throw some problems into the markets towards the end of this year and cause some volatility on exchange rates. The OECD did however say it expects the Chinese economy to grow for the next two years which can be argued is only a good thing for the strength of the Australian Dollar.

If unemployment rates continue to remain low in Australia and Chinese growth continues this could keep the Australian Dollar’s record of uninterrupted growth of 21 years. With focus on what may happen next week with the Reserve Bank of Australia and the UK deciding what to do with interest rates this could provide some good short term buying opportunities if you need to convert Sterling into AUD.

If you have never used a currency broker before and would like to find out the benefits compared to exchanging currency through a bank then feel free to email me directly or would like more detailed information Tom Holian teh@currencies.co.uk

What now for GBP/AUD? Get the best exchange rate for your Australian Dollars

Sterling exchange rates have remained relatively stable against the Australian dollar today with the high/low ranging between 1.5281 and 1.5340. Tomorrow is a quiet day as far as GBP and the AUD are concerned and movements again in the short term may well rest on investor confidence. I am a little surprised with the reaction of the market today as I would have expected strength in favour of the Australian dollar following the agreement between euro zone finance ministers and the International Monetary Fund to
reduce Greece’s debt, paving the way for the release of urgently needed aid loans. This lead to an increase in stock indices through an increase in market confidence – however currencies did not react in their typical manner, showing how difficult this market is to predict at the moment. Usually an increase in confidence will come hand in hand with a drive towards higher yielding currencies such as the Aussie, therefore I would have expected yesterdays news to have lead to an increase in demand for AUD and hence an increase in price. This has not been the case and suggests the market is likely to remain range bound between 1.52-1.54 for the foreseeable future.

Should you have an upcoming currency exchange and you would like to get a detailed analysis of the current market and to see what rates of exchange we can achieve when compared to your bank or current provider then please contact Mike on 01494 787478. Having worked in the currency industry for over 6 years I would be happy to pass on some of this knowledge to you to help you maximise your exchange and get the most out of the current market. Alternatively please email me at mgv@currencies.co.uk

Strong Stockmarket equals Strong Australian Dollar

With equity markets at the end of last week strengthening we have seen further movements into the Australian Dollar as investors risk appetite increases. With the talks of what will happen in Europe all eyes will be on the ongoing talks this week.If a bailout plan is reached for Greece we could see further strengthening for the Aussie but the reverse may occur if negotiations do not work.

As Greece gets closer to announcing bankruptcy the Eurozone ministers will be continuing their talks tomorrow in an efforts to agree what measures will need to take place in order for them to receive the EUR31.2bn needed to stabilise the country’s economy.

For up to date information as to how these talks may affect your exchange rates when buying or selling Australian Dollars feel free to email me directly Tom Holian teh@currencies.co.uk

Global confidence knocks AUD exchange rates

Following the announcement that Moody’s the credit rating agency has downgraded France earlier in the week, global markets and confidence have taken a hit leading to a potential opportunity for anyone buying the Australian dollar. This morning may also prove important for short term investor confidence as EU leaders meet in Brussels to discuss the long term EU budget and how to reduce their long term spending plans. No doubt the meeting will see a varied difference in opinion and David Cameron has been open in stating he will veto any plans that may directly hinder the UK. For me it is unlikely a deal will be agreed and this is likely to keep investors on the edge of their seats – as a result I would not be surprised to see GBP/AUD head towards 1.55.

Longer term the fundamentals behind the Australian economy certainly seem far more positive than the UK, however their is a real chance of future interest rate cuts from the Reserve Bank of Australia and this could keep further pressure on the dollar. However the UK is likely to see further Quantitative Easing in the New Year and this should keep any strong gains against the AUD to a minimum and I would expect rates to remain range bound between 1.53-55 for a little while.

To discuss the current market conditions and to get a detailed forecast then please contact me on the office number 01494 787478. As one of the UK’s largest independent currency brokers I am confident of undercutting any price offered and would be happy to provide you with a competitive commercial rate of exchange for your pending transfer. Please contact Mike on 01494 787478 or email mgv@currencies.co.uk

GBPAUD rates improve as prospect of further rate cuts loom… Underlying Reasons for AUD strength remain

As highlighted in earlier posts the RBA – Reserve Bank of Australia has stated and left the door open for further rate cuts in the future. Historically an interest rate cut weakens the currency concerned and indeed the AUD has weakened against most currencies today. However the overall picture and reasons for AUD strength remain. If you are planning a transfer involving the Australian dollar in the future it looks highly likely the Aussie will continue to appreciate or at least retain much of the strength that has held it at close to record levels against most currencies.

This was shown quite clearly against sterling since in the last month the pound has generally found support against a basket a currencies as the immediate threat of more QE was removed. The GBPAUD rate however fell as the Aussie found favour among traders. This was a reaction to improved market sentiment regarding China. Chinese economic data is still strong and whereas in the summer many panicked thinking that China was about to suffer a hard landing, we have actually seen the data paint a slightly rosier picture.

I therefore feel that the Australian Dollar will continue to remain strong in the future despite fears over a Chinese slowdown and indeed concerns over further rate cuts. These two issues will however provide spikes for those buying Aussies to take advantage of.

For a full no obligation discussion of all the events surrounding your currency transfers you can contact me for information. Jonathan Watson jmw@currencies.co.uk 01494 787 478

Reserve Bank of Australia Minutes

RBA Minutes were published over night which showed that there might be room for further easing. The central bank did suggest that the current interest rate of 3.25% was ‘appropriate’ but my feeling is that we have a cut round the corner. The RBA will not meet in January or February which means that is there is further movement it is likely to be in December as waiting till March could harm the economy during that period. The recent slowdown in the mining industry meant that the RBA have downgraded their GDP forecast for 2013 to less than 2.75% before climbing again in 2014 to 3%. As always it is important to consider these forecasts but at the same time it is almost impossible to predict accurately as there are so many variables which could affect the economy. My personal thoughts are that as long as China continues its investment in Australia and buying up raw materials/resources the Australian Dollar will remain relatively strong against Sterling, Euro and US Dollar.

A recent article published by the International Monetary Fund has suggested that the Australian Dollar may be used as an official reserve asset. As one of the world’s leading commodity-rich currencies this seems like a good idea at the moment as with such enormous reserves particularly in Western Australia the expansion of this particular area could keep the AUD strong. The idea behind the plan is to firm up the global banking system by having different styles of industry/commodities to support the wider global economy to avoid a future problem like the one experienced during the credit crunch of 2008.

Tomorrow the Bank of England publishes its minutes so any signs of further Quantitative Easing may cause an opportunity for Sterling to increase against the Australian Dollar so if you have a currency requirement and want to save money when buying Australians Dollars compared to using a bank feel free to contact me directly on email Tom Holian teh@currencies.co.uk

Is the Australian Dollar Overvalued?

As we approach the end of the trading week we have seen Sterling claw back some of its losses against the Australian Dollar over the last few weeks. With problems in Europe and a recession announced earlier this week investors have sold off the Aussie and moved their funds back to safer haven including Sterling and the US Dollar. As the mining industry continues to boom it is difficult to see this ending particularly with the new Chinese PM who will likely continue China’s recent investment in Australia. As their own population continues to grow it is likely that Chinese demand for raw materials will stay strong. The problem for Australia though is that whilst demand is strong and the mining industry grows this is having a detrimental affect on the wider economy in the country. With Australian Dollar exchange rates so high against both Pound and US Dollar the spiraling costs of living down under may mean that the Reserve Bank of Australia may have to intervene in order to weaken the Aussie.

Generally speaking the Australian banks are the envy of other western economies as their balance sheets are a lot stronger and they avoided the debt levels that occurred across Europe and the US during the last 5 years. It could be argued that Australia has been the main benefactor of a weak global economy and with interest rates well above those found in UK, Europe, US & Japan we could see the Aussie remain strong for quite some time. My personal feeling is that we’ll see GBPAUD exchange rates improve next week as the RBA minutes are published on Tuesday and any hints of discussion about cutting interest rates could provide Sterling with some strength.

For up to date exchange rates and how to save money on foreign currency transfers feel free to email me directly Tom Holian teh@currencies.co.uk

 

GBP AUD Exchange Rate Improves following problems in Europe

GBPAUD exchange rates have risen today by almost a cent after Greece announced that their economy has shrunk by 7.2% in the third quarter compared with 12 months ago. This was even worse than the previous quarter which saw the economy contract by 6.3%. Greece has been in recession for four years now and has been one of the problem regions across the Euro zone. With their third tranche of bailout funds due next week this could provide some stability and encourage investors to look at buying Australian Dollars again but for the next few days I think we could see a return of strength for the Pound.

In the UK’s Quarterly Inflation Report this morning Mervyn King suggested that economic growth will struggle for at least the next three years. Even though previous quarter’s figures showed a growth of 0.9% Mervyn King said that output could fall away in the quarter we’re in at the moment. The impact this could have on exchange rates could be negative for Sterling if these comments end up coming true as confidence will be lost for the Pound and therefore we could see Australian Dollar strength meaning less AUD for your GBP.

Tomorrow is a huge day for the currency markets as both France and German GDP is released. If the results are lower than anticipated we could see Euro weakness which in turn could see Sterling improve against all majors an investors look to the Pound as a safe haven currency. First thing we see the release of Australian Consumer Inflation Expectation figures so if you’re thinking about buying Australian Dollars soon then get in touch to see how we can help save you money when transferring currency. Tom Holian teh@currencies.co.uk and I look forward to hearing from you.

 

Get the best exchange rate for your Australian Dollars

My thoughts with regards the AUD depend very much on global confidence. With the yields offered by AUD much higher in comparison to many other currencies it is often regarded as an attractive investment during times of increased global confidence and should we see Greece offered its final bailout and Spain admit defeat and request a bailout form the European Central Bank, as I believe they will, then I personally think this will increase market confidence and a drive towards riskier assets seen. This in theory should benefit the AUD and potentially benefit those looking to sell Australian Dollars.

Should you need assistance with an upcoming foreign exchange transfer and would like to discuss the service in more detail then please take a look at our main website www.currencies.co.uk and register your free no obligation trading account. I am happy to keep you informed with market rends to try and maximise your exchange and can be reached on +44 (0)1494 787478 to discuss the market further, if you prefer why not email me direct at mgv@currencies.co.uk

Australian Dollar Strength as Chinese Investment Increases

The Australian Dollar has continued its recent run of form as China announces more plans to allow foreign investors to invest in the country. The aim is to promote economic growth and they have said they will raise the quota for the ‘Qualified Foreign Institutional Investor’ (QFII) once the limit of US$80bn has been reached. This is the second time already that China has increased the amount. For large institutions they have allowed them previously to invest as much as US$1bn but now they’ve announced that this will also be increased.  With the news of China being taken as positive the Australian Dollar has strengthened against Sterling to 1.5240 on mid-market levels.

The Chinese Yuan has also strengthened which has seen both the AUD and NZD remain strong from last week and the AUD has hit a 6 week high against USD. Chinese data from over the weekend showed that trade surplus is the highest in 45 months during October, yet another reason for AUD strength. With news that the Japanese economy has shrank by 0.9% in the third quarter this has seen a sell off from YEN with investors looking for other opportunities including Australian Dollar.

Watch out for tomorrow’s Inflation Data for the UK out at 930 UK time which could provide a sharp movement on GBPAUD exchange rates. Year on year figures expect to be 2.3% so anything higher could see Sterling have a small fight back against the AUD so if you do have a requirement to transfer Australian Dollars contact me directly to see how this data release might affect exchange rates. Tom Holian teh@currencies.co.uk