Australian Dollar Weakens after US Fed Intervention (James Lovick)

The Australian dollar has come under renewed pressure following new developments in the US following a speech from US Fed Chair Jerome Powell. He feels the US economy has strengthen since the last December rate increase and has indicated that interest rates may need to rise faster than initially first thought. This is relevant to the Australian dollar as the currency is heavily impacted by changes in US monetary policy. In this instance the prospect of higher interest rates in the US are likely to mean funds leaving Australia and back to the US where interest rates will be higher which is negative for the Aussie.
From here on any changes in stance from the Reserve Bank of Australia are likely to see considerable volatility for the Australian dollar.

GBP AUD

Clients looking to buy or sell Australian dollars with pound need to keep a very close eye on all the Brexit developments this week. There have been a lot of political interventions across the spectrum over the last couple of days ahead of the eagerly awaited speech from UK Prime Minister Theresa May. The Irish border has become the political hot potato this week and a positive speech which is able to alleviate those concerns could see considerable strength for sterling exchange rates. There is a massive risk though that there could be major political uncertainty if political forces become able to force a general election or a second referendum.

UK data is light today with UK mortgage approvals although construction data from the Purchasing Managers Index released tomorrow could prove influential for GBP AUD. The construction sector is one of the first sectors to have troubles ahead of a downturn and the data could proved a good snapshot as to the health of the sector.

To discuss the Australian dollar and how it is likely to impact on your own currency requirement then please get in touch with me James at jll@currencies.co.uk

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