Trade Wars weigh on the Australian dollar!

The Australian dollar exchange rate is looking more and more attractive for buyers as uncertainty over the global trade outlook weighs on the currency. Expectations for the RBA (Reserve Bank of Australia) remain centered around their belief for future interest rate hikes which might well see the Aussie weaken even further in the future.

Trade Wars have weighed on the Australian dollar over the weekend which has seen the currency weaker as investors try to make sense of what the global economic outlook holds in store for the Chinese economy. With the Chinese economy at risk of warring with the US over trade tariffs, the potential for a decline in Chinese economic activity is high. With China being the main trading partner of Australia, the highs and lows of Chinese economic activity do have a direct influence on the price of the Australian dollar.

Overall, the longer term behaviour of the Australian dollar could be directly linked to the outcome from these Trade Wars, many had believed it could all be solvable and it might well pan out this way. However, it is no secret of Trump’s plans to change the terms of trade with China, unless China are making some progress with this, it is unlikely the Aussie will be rising anytime soon.

Trade Wars are not the sole focus and depending on the currency pair you are considering, there are many other elements which could drive the market. For GBPAUD the Bank of England meeting on Thursday could be a driver we need to aware of, clients with any GBPAUD transfers buying or selling Australian dollars, would do well to get in touch before the event to bring themselves fully up to date with the rates and the market.

Thank you for reading and I hope you find our information useful. For more information at no obligation please speak to me Jonathan Watson by emailing jmw@currencies.co.uk

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