Daily Archives: May 2, 2018

Australian Dollar predicted to fall throughout 2018

Those of our regular readers hoping for a higher Aussie Dollar will be aware of how its upside is currently limited, and how the the US Dollar is partly behind the softening Australian Dollar.

The most simplistic way of looking at it, is that now the US Dollar is in many cases offering a higher rate of return than the Australian Dollar, investors are more likely to hold funds in that currency as opposed the the Aussie. Previously AUD offered one of the highest rates of return within the developed world and that resulted in a strong Aussie Dollar.

The issue now is AUD has a long way to fall if it’s to return to more familiar trade levels when we consider historical levels, which is perhaps why some predict to see it continue to fall. To put the US Dollars increased attractiveness into perspective, the US Dollar Index (which measures the US Dollars performance against a number of major currency pairs) has risen 3% since April the 16th. A clear indication of how investors are pooling funds into the currency.

The Reserve Bank of Australia on the other hand is adopting a different approach to the Fred Reserve Bank in the US. There are no interest rate changes from the RBA expected until next year, which is perhaps another reason that some economists are expecting to see the Aussie Dollar fall.

If you have a large currency exchange to carry out in the coming days, weeks or months then you are more than welcome to speak with me directly as I will be more than happy to help you both with trying to time a transaction and getting you the top market rate when you do come to buy your currency. A small improvement in a rate of exchange can make a huge difference so for the sake of taking two minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can email me (Joseph Wright) on jxw@currencies.co.uk and I will endeavour to get back to you as soon as I can.

US dollars strength puts pressure on the Austrlaian dollar

In recent weeks the US dollar has gone from strength to strength and investors are second guessing that commodity currencies will continue to come under pressure in the weeks to come. The US dollar index which measures the US dollar against a basket of major currencies is up 3% since mid April. Furthermore 10 year US bond yields have broke through 3% for the first time since 2014.  When bond yields are on the rise this tends to mean the central bank have another reason to hike interest rates.

Over the last few years speculators have left their assets in the Australian dollar due to the higher interest rates. But now that the US have hiked and it appears that further hikes are on the horizon I expect speculators will continue to sell off their Australian dollars in a bid for higher returns elsewhere. In regards to USDAUD exchange rates the Australian dollar has dropped below 0.75 for the first time in 10 months.

The problem the Australian dollar has is that the Reserve Bank of Australia have announced that there is no reason to hike interest rates anytime soon and some economists are suggesting the Australian dollar will be left behind as a hike doesn’t look likely for at least 18 months.

When buying or selling Australian dollars its always important to analyse both currencies you are converting. For example it looks like AUDUSD will continue to fall in the weeks to come as the US dollar continues to strengthen therefore selling Aussies to buy US dollars sooner rather than later may be wise. However if converting AUDGBP, the pound is under pressure because of Brexit and the Bank of England holding off for a period may be wise.

For people that buy and sell Australian dollars on a regular basis or are looking to make a one off transfer, the currency company I work for can save you money. Feel free to send me the reason for why you are converting currency, the currency pair you are trading (AUDGBP, AUDUSD), and the timescales you are working to and I will send you my forecast and the process of using our brokerage drl@currencies.co.uk.