Daily Archives: June 2, 2017

China’s slowing growth means trouble for the Australian Dollar (Daniel Johnson)

China’s Credit Rating Downgraded

Australia is heavily reliant on the Chinese purchasing their goods, it make s up a significant proportion of Australian GDP. Although Chinese growth is still impressive it is not growing at the same rapid rate as it was previously. This is hitting the Australian dollar. Iron ore is Australia’s biggest export and it’s price has plummeted of late due to the drop in demand.

Personally I am always slightly dubious in regards to data from China, rumors have been circulating for years of shadow banking and manipulation of data. I think the economy is not as strong as people believe. This does not bode well for the Aussie.

The Aussie has  recently been  hit by Moody’s credit rating downgrade of China due to the country’s high levels of general indebtedness. It would be wise to keep an eye on next weeks data releases so you can see the impact on the Australian economy. Wednesday will see the release of Australian GDP figures and Thursday we will see trade balance data. Both releases come through during the early hours, so if you are looking to trade short term, limit orders maybe the order of the day. A limit order allows you to set a target rate of exchange and should that level become available your purchase will be made automatically 24hrs a day.

UK General Election

This is currently a key factor in GBP/AUD levels. The conservatives are deemed as more positive for the UK economy so as Corbyn gains popularity expect Sterling to lose value. A hung parliament is now a possibility and this could cause a further fall for the pound. If there is a conservative majority expect the pound to rally, however if there is need for a coalition this could be detrimental. Bickering between the parties will not be good for Brexit negotiations and could cause serious problems for the UK economy.

If you have a currency requirement it would be wise to be in touch with an experienced broker during such volatile times. It is crucial if you wish to try and maximise your return. If you let me know the details of your requirement I will endeavor to time your trade and also gain the most competitive spread. Feel free to e-mail me at dcj@currencies.co.uk.