Category Archives: Australian Dollar Strength

US/China Trade War hurting AUD (Daniel Johnson)

Australian Dollar Forecast

AUD  has proved fragile of late due to several contributing factors. There are domestic issues, such as the high value of living in high wage growth areas. This is causing Australian residents to cut back on retail spending. One of the key issues at present is the knock on effect from the US/China trade war.

Australia has a heavy reliance on China purchasing its’s goods and any effect on Chinese growth can have ramifications on the Australian economy. As the trade war escalates so does the potential for the Australian dollar to weaken. President Trump has recently implemented a further 10% tariff on $300bln worth of Chinese products. The Chinese have retaliated by urging  Chinese businesses  to cease purchasing US agricultural products.

Goldman Sachs believe the trade war could continue for some time which does not bode well for the global economy let alone for Australia who has close economic ties with China.

There is the possibility of further interest rate cuts from the Reserve Bank of Australia (RBA) in 2019 according to the bank Governor, Philip Lowe. This could cause movement for the Australian dollar.

Despite the problems surrounding the Australian economy unfortunately it seems that the problems surrounding Brexit outweigh those down under. Until there is some sort of clarity surrounding the Brexit debacle, I can find  little reason to justify significant gains for the pound.

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 19yrs. Foreign Currency Direct PLC.

If you would like my assistance I can be contacted at dcj@currencies.co.uk. Thank you for reading. Daniel Johnson

Pound to Australian Dollar continues to trade just below 1.80, which factors could see the pair breach this level?

Earlier this morning GBP/AUD tested the 1.80 resistance level, with the pair hitting 1.7998 before easing off and at the time of writing the inter-bank level is 1.7940. The Pound to Australian Dollar rate has remained below the 1.80 handle ever since dropping below it at the beginning of July and based on the number of times we’ve seen the pair test 1.80 it could take some significant to see the pair return to trade levels in the 1.80’s.

AUD was dragged downward by the New Zealand Dollar earlier this week when the Reserve Bank of New Zealand surprisingly cut interest rates by a greater margin than market commentators had expected, resulting in a drop in the New Zealand Dollars value and this negatively impacted AUD also.

Later this week there will be a speech from Reserve Bank of Australia governor Lowe, and I think the markets will follow this closely in case he decides to follow the footsteps of the RBNZ and signal further cuts in future from Australia’s central bank. This could potentially result in a weakening of the Aussie Dollar which could then help the GBP/AUD rate move above 1.80 so those following he pair should be aware of the speech this Friday.

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.

Pound to Australian Dollar Forecast (Daniel Johnson)

Inflation & US/China trade war a concern for Australian Dollar Investors

The Pound has lost ground against the Australian Dollar of late which can be largely attributed to the lack of clarity surrounding Brexit.  Australia has had it’s own trouble however.  Inflation continues to be a problem down under and it is still some way behind the Reserve Bank of Australia’s  (RBA) 2-3% target. The RBA cut rates earlier in the year to 1% in an attempt to combat inflation and there is the possibility of further rate cuts during 2019. The next interest rate decision is due during the early hours of tomorrow and although rates are expected to remain unchanged the statement following the decision from the RBA could influence markets if it is again reiterated there is the possibility of further cuts later down the road.

The heavy reliance on China purchasing Australia’s exports is also causing problems for the Australian Dollar. As the US impose increased tariffs on China, China’s growth slows which in turn has a knock on effect to the Australian economy. Investors are choosing to move away from riskier commodity based currencies in favour of save haven currencies such as the Swiss Franc or US Dollar.

Increasing probability of a Brexit No Deal

Despite the problems in Australia, Sterling still could face further losses. Boris continues to threaten no deal and stated last week he would be ‘turbocharging’ preparations to leave the EU without a deal. Boris is using the threat of a no deal as ammunition to gain a more favourable deal on Brexit. Basically speaking however, the higher the probability of a no deal the weaker you would expect the Pound to become. Brussels stance remains unchanged again reiterating there will be no concessions to the current deal on the table. It is not in Brussels interest to let the UK leave with a decent deal, they do not want other members of the bloc to consider following suit.

The timeline is also a concern. The parliamentary recess concludes 3rd September leaving less than 8 weeks to get a deal in place, keep in mind Theresa May had two and a half years. According to Bet Fair there is a 57% chance of a general election, if you look at when previous elections have taken place the currency in question tends to considerably weaken.  The British 2010 general election serves as testament to this.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker when the market is currently so hard to predict. If you let me know the details of your trade I will endeavour to produce a free trading strategy to suit your individual needs. Have faith knowing you will be dealing with a brokerage in business for over 18yrs, Foreign Currency Direct Plc. We are a no risk entity as we do not speculate on the market and we are authorised with the FCA. If you have a currency provider take a minute to send over the rates they offer and I am confident I can demonstrate a significant saving.  I can be contacted at dcj@currencies.co.uk . (Daniel Johnson) Thank you for reading

GBP/AUD hovers above 1.77 as markets await confirmation of new UK Prime Minister, with Boris Johnson the favourite

After a quiet month or so regarding Brexit updates and GBP volatility, the markets are now gearing up for the announcement of the new Tory leader and Prime Minister with frontrunner Boris Johnson expected to win by a clear majority.

It’s likely that the announcement will be made tomorrow and as we’ve seen over the past weekend there could be Conservative Party members that will wish to step down from their positions if Boris Johnson becomes Prime Minister.

Sterling has gradually lost value since the beginning of May against the majority of currency pairs as the likelihood of a no-deal Brexit has increased. Boris Johnson was one of the key figureheads of the pro Brexit movement and he’s suggested that he’s more open to the idea of a no-deal Brexit and leaving without a deal in place come October the 31st. This is why the Pound has come under pressure so those of our readers following the GBP to AUD exchange rate should be aware of this and the markets perception of Boris Johnson’s plans.

Data is light out of Australia this week, but I would expect all eyes to be on Reserve Bank of Australia Governor Philip Lowe’s speech in the early hours of Thursday morning. Any hints at future monetary policy from the RBA are likely to impact AUD exchange rates so it’s worth keeping an eye on this speech for that reason.

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.

Pound to Australian Dollar Forecast – New British Prime Minister Next Week

The pound to Australian dollar exchange rate has fallen significantly lower as Brexit drives the pound down ahead of a new British Prime Minister to be announced next week. GBP vs AUD has fallen to 1.7720 which has presented a good opportunity for those looking to sell Australian dollars to buy pounds. The direction of travel will now be heavily impacted by events next week once the new Prime Minister is in place on Wednesday. Boris Johnson is seen as the expected victor over Jeremy Hunt and any statements he makes will likely see considerable volatility for the GBP to AUD pair.

There have been reports that Boris could seek and early general election which would add another layer of political uncertainty to an already weak pound. The prospect of a Labour government or the alternative of a Conservative / Brexit party coalition of sorts would likely see the pound weaken in these outcomes both of which are credible. The reality is that there are a number of Conservative MP’s which may vote against the government in a confidence vote which would then lead the way to a general election. With a handful of remain MP’s who seek to remove a no deal Brexit in its entirety nothing can be ruled out at this stage.

The Australian dollar has proved extremely resilient against the pound despite weak growth number from China earlier I the week which showed growth to be the slowest in 27 years largely attributed to the US China trade war. With the trade dispute showing no signs of resolve just yet the Australian dollar could find itself reacting to any further developments and the performance of the Chinese economy. The markets at least took stock that some of the most recent numbers coming out of China were showing some signs of improvement. The truce on further tariffs between the US and China may help the Chinese economy for the time being but until a deal is in place it could be a bumpy ride for the Australian dollar.

For more information on the Australian dollar and assistance in making transfers when either buying or selling Australian dollars please contact me James at jll@currencies.co.uk

Could a slowdown in China result in a weaker Australian Dollar?

Our regular readers will be aware of the connecting between the Australian and Chinese economies, and in particular the importance of a strong Chinese economy and how this can benefit Australia along with the Australian currency.

In the early hours of this morning Chinese GDP figures were released by the National Bureau of Statistics and the data shows that in the second quarter of this year China’s economy grew at its slowest pace since 1992, which is growth at a rate of 6.2%. This figure was expected so we haven’t seen a sell-off in the value of the currencies tied to the Chinese economy which the Australian Dollar arguably is, but it could be a warning sign moving forward.

The trade war between Australia and the US appears to have taken its toll on the Chinese economy, and the efforts of the Chinese Central Bank don’t appear to have has d the intending effect which is why the economies growth is shrinking. Through 2018 the growth figure for the year was 6.6%, and I think that those of our clients and readers that are hoping for a stronger Aussie Dollar should continue to monitor the Chinese economies performance.

Although there will be no data releases out of the UK today, there will be a number of key releases this week such as Earnings Data tomorrow morning and a speech from Bank of England governor Mark Carney tomorrow amongst other releases throughout the week. Do feel free to register your interest with me if you wish to be updated in the event of a major market movement between the GBP/AUD pair.

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.

Best time to sell Australian dollars for pounds since January : Will the Australian dollar rise further?

The Australian dollar has very recently hit the best time to be sold against sterling at 1.7868, since January 2019. This is a combination of factors including the strength of the Australian dollar, and also the weakness in the pound. A fine example of the strength on the Aussie was shown last week when the RBA (Reserve Bank of Australia) only cut their rate by 0.25%, with the market predicting 0.5% potentially and also signs of future cuts.

By refraining from committing to further cuts, the Aussie found some strength. Sterling is of course suffering under the pressure of Brexit uncertainties, as the market continues to attempt to digest what Brexit means and prepare for a no-deal.

On the Aussie, the market was also recently offered some good news with the G20 Summit not resulting in a severe deterioration of relations between the US and China. In fact, the two sides found some loose agreement and compromise and with the situation not destabilising majorly, the Aussie has again found some form. Investors are still preparing for future concerns on the trade wars and also the possibility of future cuts, but with these not manifesting immediately as troubles, the Aussie has risen.

The pound looks like it might well struggle ahead as both Conservative Party leadership and future UK Prime Minister candidates seek to embrace a no-deal Brexit. Sterling has suffered in the face of the uncertainty and we have seen the pound lower, it is not straightforward to see where future strength will emanate from, although some clarity over who will be the UK PM might help the pound.

Expectations are still mixed on the type of Brexit we will see, with Labour backing a second referendum more strongly, and many seeing the chance of a General Election increasing, there could be more volatility ahead.

Pound to Aussie dollar rates look due to remain below 1.80 but any sudden changes in sentiment could well see a quick reversal of the current trend, particularly with the higher level concerns on trade wars and interest rate cuts for the Aussie still remaining a longer term concern.

Thank you for reading and please let us know if there are any currency transfers that you wish to run through or discuss.

Thank you, Jonathan Watson

jmw@currencies.co.uk

 

Australian Dollar set to improve further against the Pound?

The Reserve Bank of Australia cut interest rates this week to its lowest level in history at 1%. As it was widely expected the markets priced in the rate cut so the value of the Australian Dollar did not feel too much of an impact.

The RBA also hinted that it may be prepared to cut interest rates even further. Since June the RBA has cut rates by 0.5% and so I think the RBA may be tempted to adopt a wait and see approach before changing monetary policy once again.

With the markets expecting interest rates to be cut to 0.75% the GBPAUD exchange rate did not move too much as there was little reason to sell the Australian Dollar.

RBA governor Philip Lowe is due to be speaking on Tuesday and his speech should provide further clues as to when they may make further changes to policy.

Therefore, if you’re in the process of converting Australian Dollars then make sure you pay close attention to Lowe’s speech next week.

The Australian Dollar also improved during the course of this week owing to the latest trade surplus figures on Wednesday. The increase in the goods and services surplus came about owing to the increase in the export market in May.

The other good news came from the Australian housing market as building approvals increased. Although house prices have fallen in recent times down under, the increase in building approvals should be taken as a positive as it means there is an appetite for making money once again in the property market.

Whilst the UK continues to struggle with the uncertainty caused by Brexit and the leadership election I think we could see further improvements in the value of the Australian Dollar.

If you would like to save money on exchange rates when buying or selling Australian Dollars and Sterling then contact me directly for a free quote and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

 

 

Australian dollar forecast: Will the Australian dollar weaken ahead?

The latest movements on the Australian dollar have seen the currency slightly stronger as investors buy into the Aussie following a more optimistic outlook on the Trade War concerns, plus the lack of any more immediate cuts from the RBA (Reserve Bank of Australia).  The RBA in their commentary have seen potential for more cuts ahead but have not directly signalled them, hence the Aussie rising.

Clients looking to any Australian dollar transfers might wish to consider the latest developments in these scenarios, as whilst to a degree the potential for the Aussie to weaken is present, the actual turn of events does not seem to be causing this. Allow me to elaborate! Generally, the cutting of interest rates will cause the currency concerned to weaken.

Therefore, with the RBA cutting interest rates, it might be perceived that the Australian dollar would weaken. However, with the RBA not looking to make any more immediate cuts, the currency has actually strengthened. The cutting of rates up ahead could be a factor that would weaken the Australian dollar in the future, clients looking to buy or sell Australian dollars up ahead might benefit from a quick review of their situation with one of our team.

The Trade Wars are another example of the uncertainty up ahead that whilst generally negative for the Australian currency, have also been more positive for the currency lately. The Australian dollar is trading at some of the best rates this year against the pound as the uncertainty of Brexit, plus the recent optimism for the Aussie dollar itself, all helps to lead to the rate dipping below 1.80, into the 1.79’s.

The Australian dollar has not completely shifted the potential for weakness, but with the potential for further cuts ahead, and also the trade wars still possibly an issue in the future. If you have a Australian dollar transfer for the future, and wish for some of the latest news concerning the rates and the market, please do get in touch.

 

GBP to AUD rate expected to continue its decline this week

The Pound to Australian Dollar exchange rate has begun the week just north of the 1.80 benchmark level, which is around 3-cents lower than where the pair begun the week last week. There haven’t been many reasons for the Pound to climb in recent weeks and I think that until there is a new PM in place we could continue to see the political uncertainty continue to weigh on the Pound’s value which could push the GBP/AUD pair below the 1.80 level.

There will be a Reserve Bank of America meeting tomorrow and there are expectations of another interest rate cut, but as markets expect this amendment it’s already priced into the value of the Aussie Dollar. Despite this expected cut AUD is strengthening so I don’t expect to see the Aussie Dollar drop in value in it takes place, but I do expect to see the Aussie Dollar strengthen if the cut doesn’t take place.

Aside from this meeting the Aussie Dollar is being influenced at the moment but the US President’s trip to Asia, as not only has there been some positive developments between the US and China, which is a key trading partner for Australia, but we have also witnessed the first meeting on North Korean soil between a US President and North Korean leader and this has buoyed the markets. This kind of news is likely to further boost the Aussie Dollar, as it tends to gain in value in times of positive global updates due being a commodity currency.

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.