Monthly Archives: December 2018

Will the Australian dollar weaken in 2019?

The Australian dollar is likely to weaken in 2019 as the concerns over Trade Wars intensify amongst investors. There is a growing concern that in the future the market will be more uncertain and the Australian dollar, as a commodity currency is likely to be weaker in the future. Clients with a position buying or selling the Australian currency should be strapping themselves in for a volatile period as the market tries to second guess what lies ahead.

In nearly every forecast for the year ahead I have read, the AUD is noted to come off worse from a worsening Trade Wars situation under Donald Trump, showing no signs of backing down and seeking to challenge China’s economic plans. Clients with a position buying or selling the Australian dollar will have a tough time in the future to try and second guess the market but as the Aussie dollar reflects global attitudes on trade, the likelihood is that the currency will weaken.

Clients who need to make an exchange should note not just the changing global attitudes on trade but also the negative political and economic effects at home in Australian too. Whilst the market had been pricing in for an interest rate hike in the future, some are now suggesting that the RBA, Reserve Bank of Australian will in fact be forced to look at an interest rate cut instead. This could send the AUD into a downward spiral as investors look for more comfortable and stable stores of value.

2019 is shaping up to be a more uncertain time on the currency markets as investors struggle to make sense of the changing global economy that lies ahead. Investors will struggle to find the Australian dollar an attractive currency to hold, particularly when the US dollar is now offering a higher return with a higher rates of interest on offer.

If you have a transfer to make and wish to consider the latest news and trends which will move the market, please do not hesitate to get in touch to discuss further.

Jonathan Watson

jmw@currencies.co.uk

US-China Trade War does not bode well for AUD (Daniel Johnson)

Prolonged Trade War could hit the Australian Dollar

Sterling remains fragile against the majority of major currencies due to the lack of clarity surrounding Brexit, I feel GBP/AUD would be even lower than current levels if it were not for the US-China trade war.

Australia is heavily reliant on China purchasing it’s goods and services and the trade war is causing a slow down in economic growth. China has being going tit for tat on tariffs with the US and despite the current pause the situation has the potential to escalate.

The onus is on China to get the trade war sorted as quickly as possible. The trade war is a threat to China’s already slowing economy, growth missed economist’s forecasts by 0.1% in the 3rd quarter landing at 6.5%. This is the weakest quarterly growth since 2008.

There is a disproportionate effect on China when compared to the US. China’s exports to the US amounts to a bigger section of the Chinese economy than the amount to which China-bound US exports represent to the US economy. In 2017 China exported USD 50bln of goods to the States form  a USD 12trn total. This is compared to the US who exported USD 130bln worth of goods to China from USD 19trln GDP.

At present there is a 90 day pause on tariffs which commenced at the beginning of December. The US has agreed to hold back on a 25% increase on Chinese products if China agree to negotiate making fundamental changes to it’s current economic model. A 25% increase is extremely high and would no doubt have a severe impact on both economies.

This does not bode well for the Aussie. If it were not for the debacle that is Brexit I think we would be witnessing the Pound strengthen against the Australian Dollar. Brussels have stated they are not willing to make any changes to May’s deal and it glaringly obvious it will not get voted through parliament in it’s current form. We could be looking at a leadership challenge for Corbyn or a no deal scenario which would both hurt Sterling even more. I feel a second referendum could boost Sterling as polls suggest voters would now wish to remain in the EU, I think May would have to go for this scenario to emerge.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker if you wish to maximise your return. If you let me know the details of your trade I will endeavour to produce a free, no obligation trading strategy for you. If you have a trade to perform I will also happily provide a free quote and I am confident our rates are among the best in the industry. I would be willing to demonstrate this in form of a comparison with any competitor. You can trade in safety knowing you are dealing with company FCA registered and one that has been trading for 16yrs. Foreign Currency Direct PLC.

If you would like my help feel free to email me at dcj@currencies.co.uk.
Thank you for reading.

The Pound hits a 6 week high against the Australian Dollar owing to Australian housing market problems

The Pound vs the Australian Dollar has hit a 6 week high which is good news for anyone looking to send money to Australia.

The spike has occurred in part due to the tightening lending standards in Australia which has caused a problem for the Australian housing market and this has seen house prices fall in recent times.

This is a big reason for the Reserve Bank of Australia keeping interest rates on hold and with the US Federal Reserve recently raising interest rates for the final time this year global investors have been selling off the riskier based commodity currencies including the Australian Dollar, New Zealand Dollar and South African Rand in favour of a more stable US Dollar.

The mortgage companies as well as the banks have been previously lending to people without clearly identifying whether or not they would be able to afford to pay back the loans and this means that Australian banks are now paying the price for the previous problems.

In Perth, which is one of Australia’s largest cities, house prices have fallen by over 15% in the last four years and Sydney and Melbourne have also started to see a small slowdown and this means any interest rate hike down under in unlikely to be coming any time soon as this would have a direct impact of the Australian property market.

With the Reserve Bank of Australia due to be keeping interest rates on hold for the foreseeable future and the US Federal Reserve likely to keep on raising rates in the early part of 2019 I think we are due to see further Australian Dollar weakness ahead so if you’re looking to exchange Australian Dollars into Sterling it may be worth getting this organised in the near future.

The one problem that could halt Sterling in its tracks is that of the ongoing Brexit turmoil which could cause a problem for Sterling.

With the next Brexit vote due to be held in the second week of January this could cause further volatility so make sure you’re well prepared for any eventuality.

Having worked in the foreign exchange industry for one of the UK’s leading currency brokers since 2003 I am confident not only of being able to save you money on exchange rates compared to using your own bank but also help you with the timing of your transfer.

For further information and a free quote then contact me directly and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

GBP to AUD Rates Rally after Weaker Australian Unemployment Data (James Lovick)

Pound to Australian dollar exchange rates have rallied higher this week with rates for the GBP AUD pair breaking over 1.78 and creating a good short term window of opportunity for those looking to buy Australian dollars. Australian unemployment data released yesterday arrived weaker than expected with a small rise in the headline number.

Unemployment down under now sits at 5.1% which is slightly worse than the 5% that was expected, something that will be picked up on by the Reserve Bank of Australia. The central bank has hinted that interest rates may need to rise in 2019 although the economic data will very much dictate whether or not this happens. Any signs of a slowdown will almost certainly put the Reserve Bank of Australia on the defensive which could result in Australian dollar weakness.

GBP vs AUD on the whole is on a weaker footing as result of the ongoing Brexit uncertainty in the UK. However the deadline of 29th March 2019 is fast approaching and a parliamentary vote to be held 14th January 2019 will dictate the direction of travel for the pound. If Theresa May finds herself able to get this deal through parliament then the pound could see some major gains. The reality at the moment is that this is highly unlikely and an uncertain period could like ahead. With no concessions being offered by the EU the deal is likely to be voted down over concerns for the Irish backstop which currently is not time limited.

The other big factor for GBP vs AUD is what happens between the US and China with regards future trade. Tensions are fraught at the moment with allegations of corporate espionage in the technology sector. Although further tariffs on Chinese goods have been paused there is every chance that all of China’s goods could face US trade tariffs, something that will be of concern for the Australian dollar. Any slowdown in global growth could see problems for the Australian economy which may be adversely affected.

For more information on dollar exchange rates and assistance in making transfers either buying or selling Australian dollars then please feel free to contact me James at jll@currencies.co.uk

Australian dollar forecast – Australian dollar weakness ahead?

The Australian dollar has weakened overnight as investor focus shifts towards the now wider split between the US and Australian interest rate. With Australian interest rates at 1.75%, but the US now at 2.5%, the US dollar is a more attractive currency to hold and it has gained ground against the Australian dollar, weakening the Aussie in the process. The US raised interest rates overnight and are expected to raise further in 2019, despite many views to the contrary. This could see more pressure on the Australian dollar in 2019.

The economic news out of Australia overnight too was fairly positive with the Employment rate and the employment change, month on month both posting gains. This shows the Australian labour market is performing well and if such news continues in 2019, could be more supportive for an interest rate hike down under, which has so far been so elusive. The Australian dollar is likely to endure a mixed bag as we enter 2019 with the market closely following the latest news on US and Australian interest rates.

Global trade has been another factor driving the Australian dollar as the market ponders the possible negative effects from Donald Trump’s Trade Wars with China. With Australian trade relations with China forming a major part of the Australian economy, the market has been closely monitoring the sentiments on the Trade Wars, plus the possible negative fallout from any economic woes. The fact the Australian currency acts as a barometer of global trade and risk sentiment, owing to its economies close relationship to traded commodities like Coal, Steel and Aluminium, makes it all the more sensitive to such news.

Confidence is still holding in global markets but it does seem many are looking into the future with less reasons to be optimistic. This could ultimately spell trouble for the Australian dollar in 2019, particularly if the Trade Wars deteriorate further and the US presses ahead with their economic plans.

If you are looking to buy or sell Australian dollars then please do get in touch to discuss the latest news and forecasts. With the currency so sensitive to global news and developments it is important to understand all of the latest news and events to move the rates.

Thank you for reading and please contact me Jonathan Watson to discuss further.

Jonathan Watson

jmw@currencies.co.uk

 

Will GBP vs AUD Strengthen if a Brexit Deal is Reached? (James Lovick)

The pound to Australian dollar exchange rate remains on a weaker footing as Brexit remains the main concern for sterling exchange rates. After a cabinet meeting yesterday plans are now being ramped up for a no deal Brexit which should keep rates for GBP vs AUD at the lower levels of this recent range.

Rates for GBP AUD are currently trading around 1.76 for the pair and any Brexit developments over these coming weeks will almost certainly impact on the rates. The meaningful vote to be held in parliament will be held in January and should become the main focus in the ongoing Brexit debacle. The outcome of that vote to be held before the 21st January will determine whether or not there will be a deal.

The important point to highlight is that the default option if parliament does not agree the deal will be to move to no deal which will fall on WTO rules. This prospect is the main reason why the pound is on the back foot and if it were to happen there is a strong likelihood that there will be some economic disruption and the pound would likely fall. The Bank of England suggested a drop in the pound of 25% in a worst case scenario. If however there is a change of heart in the negotiations and and wording on the Irish backstop was changed for example then there could be material gains for GBP AUD.

The US Federal Reserve will meet later today where an interest rate increase of 0.25% is widely expected which will take interest rates up to 2.5%. This is important for Australian dollar exchange rates too as the level at which interest rates are set in the US had a direct bearing on the strength of the Australian dollar and rates for GBP to AUD. US President Donald Trump has been trying to put pressure on the Fed to not raise interest rates but whether this has any bearing on policy remains to be seen.

Perhaps more likely will be that the rate hike goes ahead tonight as planned but there could be a softening in stance for further rate rises in the New Year. A rate hike in the US could see the Australian dollar weaken as investors move their funds to the higher yielding dollar. However if the Fed look set to pause its rate tightening cycle in 2019 then this could see the Australian dollar make some gains.

For more information on the Australian dollar and assistance in transferring funds whether buying or selling Australian dollars then please feel free to get in touch with me James at jll@currencies.co.uk

GBP/AUD continues to trade towards the lower end of its recent ranges, where to next for the pair and what’s influencing it?

The Pound to Australian Dollar rate continues to trade in the mid 1.70’s just over 1.75, which is around the bottom of its current trend when you look at both a 3-month and a 6-month chart. There has been a steep decline in the Pound’s value from around the middle of October and much of this market movement can be attributed to Sterling weakness as the Brexit uncertainties ramp up with the Brexit date just around the corner now.

Yesterday it was announced that the ‘meaningful’ vote on UK Prime Minister Theresa May’s Brexit deal will take place. It has previously been outlined for last Tuesday but she postponed it the day before owing to fears that she would receive very little support for it. May has since won a vote of no-confidence although there were around of a 3rd of her Conservative Party MP’s that voted against her leadership which shows the discontent with her deal.

The Pound has also lost value against most other major currency pairs recently as time to agree on a deal is running out. There appears to be little scope for amendments to the deal which may be the Prime Ministers downfall as the Northern Irish backstop arrangement is the main sticking point for the deal and the reason for the DUP Party not supporting the deal which has added pressure to May and also the Pound’s value.

Although economic data is not the main driver of GBP’s value at the moment, it’s worth being aware that this Thursday there will be a Bank of England Interest Rate decision and although no changes are expected, any comments to future monetary policy plans could influence the Pound’s value.

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.

Australian Dollar Forecast : Will the Australian dollar weaken in 2019?

2019 is looking like it could be a very testing year for the Australian dollar, with a number of possible outcomes on the currency. By and large, it is likely it will be overseas events which act as the bigget driver on the currency with the Trade wars between the US and the China looking a key factor to drive the currency. With 30% of Australian exports going to China, the economic outlook on China and global trade in general, is vital to determining how the Australian dollar will behave.

Throughout 2018 the market has been see-sawing on the prospect of the trade disputes deteriorating or improving. The overall expectation in 2019 is the trade tensions will only deepen as both the US and China dig their heels in, seeking to save face and ultimately harming their economies in the process. Donald Trump is looking like he will only continue to put pressure on China and the Chinese are unlikely to back down.

The recent extension of the 10% tariffs further into 2019 was seen as welcome, although the looming prospect of 25% tariffs on $200 bn worth of goods should be cause for concern. The market is eagerly awaiting the next steps and future direction of the trade disputes. Even with these short term ‘lulls’ in sentiment, the overall negative effects from this issue should be a thorn in the side of the Australian dollar in 2019.

The RBA, Reserve Bank of Australia, have been very aware of the trade concerns and this may well weigh on their decision making process in the coming year. The likelihood is that the RBA will not raise interest rates next year, as they have to allow the Australian economy the space it needs to continue growing, amidst the uncertainty of a slower Chinese economy.

There is even speculation the RBA might need to consider an interest rate cut, should the Australian economy really struggle. Clients holding Australian dollars to sell, might wish to take stock of the favourable levels on offer compared to how weak the currency might get next year.

Thank you for reading and please speak to me Jonathan Watson to learn more regarding the currency and the best strategy to maximise value.

jmw@currencies.co.uk

 

Brexit chaos continues as Conservative MP’s trigger a vote of no confidence in PM May, will this put pressure on GBP/AUD?

This morning it’s been announced that a vote of no-confidence has been triggered by the Conservative Party after Sir Graham Brady, the Chairman of the 1922 Committee confirmed that he has received at least 48 letters of no-confidence from Conservative MP’s.

The Chairman of the 1922 Committee isn’t required to announce how many letters he’s received but we do know that it’s at least 48 as this number constitutes 15% of the Tory members. Since the news broke the Pound has actually remained unchanged and this is probably because the vote will take place this evening between 6.00 pm and 8.00 pm so until shortly afterwards we won’t know the outcome and therefore, the next steps for Brexit.

Since the announcement which was around 7.45 am this morning, there have been a number of Conservative MP’s that have outlined their plans to support May, with the general consensus that a change in leadership this far into the Brexit process would be chaotic. If there are a number of votes against against her though, there is a chance she may resign even if she’s not obliged to owing to the lack of support from her own political party.

May has already given a speech outside Downing Street this morning whereby she’s highlighted that if she’s replaced a new leader would have to delay Brexit, as they wouldn’t have enough time to renegotiate the withdrawal agreement.

With regards to the Pound to Aussie Dollar exchange rate I would expect to see the next potential market movement to come after the vote this evening, with the result expected to be released shortly after the vote.

AUD exchange rates have been influenced over the past week and a half by the concerns that the US-China trade war tensions could resurface, as China is Australia’s main trading partner. Those of our readers planning a GBP/AUD trade should follow this matter as it’s the main driver of AUD value at the moment.

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.

Sterling falls against the Australian dollar due to meaningful vote cancelled

In recent weeks the pound has been falling dramatically against the Australian dollar and this trend continued throughout yesterday trading session as Theresa May cancelled the meaningful vote in Parliament. Furthermore the Prime Minister made a statement about why she had cancelled the vote and the general consensus was because she was going to lose and therefore she was going back to Brussels this week for further guarantees. Following the statement in the House of Commons Theresa May answered questions from fellow MPs and the Prime Minister came under further pressure and this was represented in the exchange rates.

GBPAUD dropped throughout the day from 1.7725 to 1.7475. To put this into monetary value a AU$400,000 transfer now costs an additional £3,300 compared to this time yesterday. 

The Prime Minister has now flown to Hague to discuss Brexit with Mr Rutte, the Prime Minister of the Netherlands. Mr Rutte has been known to give an extra helping hand for the Prime Minister and this is why I believe this is her first trip. Thereafter she is set to travel to Berlin to meet to meet Angela Merkel and then hold talks with the European Commission.

If its the case the Prime Minister fails to receive further reassurances from the EU, it looks like her days are numbered. If the Prime Minister was ousted or resigns a leadership contest would take at least a couple of weeks especially over the Christmas period. therefore I expect this would put further pressure on sterling and GBPAUD would fall further.

Looking further ahead I expect the pound will continue to decline against the Australian dollar and fall to the low 1.70s or even the high 1.60s. However if the Prime Minister manages to get further concession which is extremely unlikely the pound could rebound significantly making Australian dollars cheaper to buy.

If you are buying or selling Australian dollars in the future, I would strongly recommend getting in contact to discuss your situation. The company I work offers a proactive service to offering economic information whilst having the ability to offer award winning exchange rates. Feel free to email me with your requirements along with the timescales you are working to and I will respond with my forecast and the process of using our company drl@currencies.co.uk.