Category Archives: Australian Dollar Strength

US/China Trade War and Brexit dictate GBP/AUD (Daniel Johnson)

Progress in US/China talks

Due to Australia’s heavy reliance on China purchasing its goods and services any fall in growth from China has an impact on the Australian economy and in turn the Australian Dollar.

The US/China trade war is a huge concern amongst investors, a trade war between the world’s two largest economies has huge implications. The Trump administration wants China to change its economic strategy, something Chinese President,  Xi Jinping will be reluctant to do. The changes that are being asked for would hit the Chinese economy hard and  long term. It may be the case that the Chinese will try and give very small concessions in  bid to lengthen the trade war and out last Trumps reign. A dangerous game considering the US has threatened to increase tariffs to 25% should their terms not be met. 25% is a huge increase and if China retaliate both economies will suffer not to mention the global impact.

At present, trade talks seem to be progressing well.  When asked about how talks were going yesterday in Beijing, US Treasury Secretary , Steven Mnuchin replied “so far so good.”

If it were not for the lack of clarity surrounding Brexit I think Sterling would be making gains against the Aussie. Although, the pound could lose value as negotiations with Brussels intensify I think the likely outcomes are either an 11th hour deal or an extension, both of which could cause significant Sterling strength. Morgan Stanley recently suggested there was less than a 5% chance of a no deal scenario. The market moves on rumour as well as fact so due to a no deal Brexit being largely factored out of the equation at present, if it were to occur expect  a large drop in the pound as this outcome is definitely going against the grain.

If you have a currency requirement I will be happy to assist. If you let me know the details of your trade I will endeavour to produce a free trading strategy. During a period of such uncertainty it is important to be in touch with an experienced broker if you wish to maximize your return. We have tools at our disposal to make sure you do not miss out if there is a spike in your favour.
If you already have a currency provider in place. Drop me an email with what you are being offered and I am very confident I will be able to demonstrate a significant saving. It will only take you two minutes and I am sure it will be worth your while. You can trade in safety knowing you are with a Foreign Currency Direct PLC, a firm trading for over 18yrs and FCA registered.If you would like my help feel free to email me at dcj@currencies.co.uk.

US China Trade War Intensifies (Daniel Johnson)

AUD losing investor confidence

Australia is heavily reliant on China purchasing its goods and services. Any fall in Chinese growth has a knock on effect on the Australian economy and in turn the Australian Dollar.

The US China trade war is a serious concern for investors and it is pushing them away from riskier commodity based currencies such as the Australian Dollar. The US and China are currently in talks and the Trump administration wants China to make fundamental  changes to its current economic strategy.

If China were to make some of the changes requested it would have serious implications on the Chinese economy. Chinese President, Xi Jinping knows this and it may be the case that he will try to make as little concessions as possible in an attempt to outlast Trump’s reign.

It is a risky game considering the US has threatened to increase tariffs by 25% on $200bn worth of goods. The US has said they will implement the tariffs if the two sides fail to make progress by 1st March.

According to a UN trade agency report Asian countries would be the most effected. The implications of such an increase should not be understated. With two super powers trading blows the effect will be wide reaching and will hit the global economy.

The Australian Dollar could be among the hardest hit until we have a resolution, which could be some way off, AUD will remain fragile.

If it were not for the lack of clarity surrounding Brexit I think we could see some decent gains for Sterling against the Aussie, unfortunately the uncertainty over Brexit is outweighing concerns down under and the Pound continues to be anchored at low buoyancy levels. There are alternative options to May’s deal being put forward, but there is still no firm way forward. May’s intention is to gain concessions from Brussels that will be accepted by parliament. She has already attempted to this in December after delaying the initial vote. May was stone walled by Brussels and European Commission President, Jean Claude Junker has continually stated there will be no concessions made. Many still believe a deal may be struck at the 11th hour, but Brussels have stuck to their guns up until this point. The PM is currently in a worse position than in December following the diminishing probability of a no deal scenario (one of her only sources of ammunition) with Morgan Stanley predicted there is less than a 5% chance of a No deal Brexit.

If you are looking to move GBP – AUD short term aim for the 1.83s.

During such unpredictable times you need an experienced broker on board if you wish to maximise your return. If you have a pending currency transfer let me know the details of your trade I will endeavour to assist. There is no obligation to trade by asking for my help, I will provide a free trading strategy to suit your individual needs. If you do wish to try our service you can trade in the knowledge we are a no risk entity, as we do not speculate. Foreign Currency Direct PLC has been in business for over 18yrs and we are registered with the FCA. If you already use a provider I can perform a comparison within minutes and I am confident I will demonstrate a considerable saving. I can be contacted at dcj@currencies.co.uk.

 

 

 

Australian dollar mildy firmer after RBA Meeting!

The Australian dollar has been mildy firmer after the RBA, Reserve Bank of Australia, kept their interest rates on hold overnight. The expectations for the RBA is to have moved their outlook to a slightly more dovish tone but overall they kept up their current viewpoint, which is essentially that they will keep interest rates on hold for now.

The RBA did cite increased global risks, which could lead to a lower economic outlook in the future. This might well prove indicative for future Australian dollar weakness, there is now increased expectations that the longer term future for the Australian currency remains subdued. However, for now, as the RBA are not directly forecasting a rate cut, the market is likely to err on the side of caution.

In other news overnight the latest Australian Retail Sales figures weighed slightly on the market, coming in slightly worse than expected. This could be another sign of what the future might hold and be an indicator that the Australian dollar might in the future be struggling.

Some of the downside risks for the currency include global events such as the Trade Wars with China, and also recession in Italy. With the IMF recently having downgraded global growth, we could see the Australian currency lose value longer term if global confidence does not improve.

I expect the Australian dollar to weaken longer term and think clients looking to sell the currency would be better to move sooner than later, to avoid the risk of any losses. The Australian currency is effectively a barometer of sentiments on global trade and with those sentiments likely to suffer further, it seems likely the currency will fall in the future.

Next week is a series of Australian releases, including Home Loans and also some Chinese data. With Chinese economic news weighing on the economic outlook for the region, clients with Australian dollars to sell might wish to take advantage of the more recent improvements and lock in their gains.

Thank you for reading and please let me know if you have a transfer that we might be able to help out with, or you wish to discuss.

Jonathan Watson

jmw@currencies.co.uk

 

Pound sees signs of a struggle against the Australian Dollar after Brexit discussions

The Pound has started to fall during the course of this week against the Australian Dollar as the Brexit talks appear to be struggling to make too much headway.

The recent amendment about the Irish backstop was voted through the House of Commons, which means that Theresa May will try to go back to the European Union in an effort to change the current terms of the backstop.

However, all throughout yesterday European leaders confirmed that the current Brexit deal on offer will not be renegotiated and this moves us towards the chances of even having a no deal Brexit.

Overnight, the Australian Dollar had a boost after the announcement made by the US Federal Reserve that they will be keeping interest rates on hold.

The statement made by Jerome Powell suggested that the Fed would not simply look at economic data but also listen to businesses and this means that the cycle of rate hikes may not be as quick as many had previously anticipated. Clearly, there is room for further interest rate hikes to occur in 2019 in the US but the statement from last night means that they may be slowing down their cycle.

The good news for the Australian Dollar is that global investors will move money away from the US and back into more riskier currencies including the Australian Dollar and this is in part a reason for the strength overnight.

I have worked for one of the UK’s leading currency brokers for 16 years and I’m confident that with my experience I can help you with the timing of your currency transfer.

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

Tom Holian teh@currencies.co.uk

GBP/AUD Rates Retract as Fears of No-Deal Brexit Gather Pace Once Again (Matthew Vassallo)

GBP/AUD rates have dropped by over a cent overnight, with the Pound losing support following parliaments decision to vote in favour of the Brady amendment.

Sterling hit a low of 1.8155, with investors selling off their GBP positions amid fears of what last night’s House of Commons vote could mean for Brexit.

MP’s voted in favour of an amendment to Prime Minster Theresa May’s Brexit deal by 317 votes to 301. This means that they will ultimately back a deal if the PM can negotiate changes to the much maligned Irish backstop. She has pledged to return to parliament with a deal to be voted on by February 13th, as long as the EU are willing to make the necessary concessions.

This however, is the key point and possibly why the Pound saw its value slip against the AUD since the vote was passed. The EU have made it abundantly clear that they are not prepared to renegotiate the terms of the Brexit deal, in particular removing the agreed Irish backstop.

Whether this is ultimately true, or they are playing hardball in terms of their negotiation tactics is now the question investors will be asking themselves.

Based on last night drop in value for the Pound, they are obviously not overly confident in an agreement being reached and if this ends up being the case, then a no-deal scenario once again becomes the most likely outcome.

This is seemingly what the markets fear most and are seemingly preparing themselves for this eventuality.

Looking at the AUD and it likely last night’s rise in value had far more to do with a dip in confidence for the Pound, rather than a spike in value for the AUD. The Australian economy continues to feel the pinch from a slowdown in Chinese economic growth and thus a fall in demand for Australia’s raw materials. Being Australia’s largest trade partner, any slowdown in China will inevitably have a negative knock on effect for the Australian economy and ultimately the AUD.

Add to this concerns over a slowdown in global trade, something the AUD and all commodity-based currencies fear and it is likely that the short-term trend on GBP/AUD rates will be dictated by investors’ confidence or lack of it, in the on-going Brexit negotiations.

If you have an upcoming GBP or AUD currency transfer to make, you can contact me directly on 01494 787 478. We can help guide you through this turbulent market and as a company we have over eighteen years’ experience, in helping our clients achieve the very best exchange rates on any given market.

Our award winning rates can be accessed very easily over the phone and I can keep you posted with key market developments ahead of any prospective exchange you need to make.

Feel free to email me directly on mtv@currencies.co.uk to find out all the options available to you ahead of your currency transfer.

 

Australian dollar at the mercy of global news!

The China – US Trade Wars have been a major factor driving the currency markets in the last 6-9 months, impacting the Australian dollar and the economy. Australian economic data has been mixed but with Chinese data reflecting a slowdown, particularly in Manufacturing, the Australian dollar has been softer.

Looking ahead there is lots of important news in the currency markets this week to move the Australian dollar, this includes information at home and abroad. Domestically we have the latest Australian CPI, Consumer Price Inflation, data to move the market. The Australian economy has been mixed and investors are still debating the prospect of interest rate hikes in the future.

Tomorrow is also important with the latest US Federal Reserve interest rate decision, which could be a market mover on the US dollar and thereby impact the Australian dollar. USDAUD is the most heavily traded pairing for the Aussie and any large movement on the USD can ‘weigh’ the Australian dollar down against other currencies.

Later this week we have the latest US-China trade war talks which could be a market mover in the future, clients with any AUD transfers should be keeping a very close eye on the latest news. The meeting this week might yield too much news since there is still a 1st March deadline for the talks to be finalised.

Finally, Friday is the latest US Non-Farm payroll data which might well trigger volatility on the Australian dollar, by altering global attitudes to risk and viewpoints on global trade. Clients looking to buy or sell the AUD should be very conscious of these developments which should see a very busy end to the week for the Australian dollar.

If you have a position buying or selling and wish to get a fresh update o the market and all the important issues driving your levels, please do get in touch to discuss the latest news with me Jonathan Watson.

Thank you for reading and I look forward to hearing from you.

Jonathan Watson

jmw@currencies.co.uk

Mixed messages on Trade Wars mystify AUD Exchange rates

The Australian dollar has been pulled from pillar to post as conflicting reports on the Trade Wars between China and the United States send mixed signals to the currency markets.  A report from the Wall Street Journal newspaper indicated the US might be ready to temper down some of the tariffs and their tone in the talks, to try to seek a resolution. This report was then quickly dismissed by the US Treasury Department, leading to the Australian losing value.

The Trade Wars are a major driver on the currency as investors seek to gauge the likelihood of Australia suffering any economic slowdown as a result of the expected slowdown in China. China is predicted to come off the worst from any developing tensions and a closely monitored Chinese Manufacturing survey earlier in the year indicated a slowdown. This saw the Australian dollar weaker and has set the tone for 2019 for currency so far.

We have expected a more negative twist and turn of events on the Trade Wars, Donald Trump is not the kind of person to easily step back from confrontation even where it causes harm. This attitude has seen the US Government enter its longest ever shutdown which has weighed heavily on sentiment and could put further pressure on the global economy.

Of benefit to the Australian dollar could be any quick turn resolution in sentiments but it does seem likely the Trade Wars will continue. Donald Trump’s actions will continue to be under scrutiny and he is unlikely to easily and quickly back down from the rhetoric that has driven the Australian currency lower.

Worsening economic data for the Chinese economy will only heap pressure on the Australian currency as investors have to weigh up the longer term prospects for economy in such uncertain global conditions. Whilst any surprise twists in sentiment could see pockets of Australian dollar strength it does feel that the general trajectory will be negative and the risks are to the downside with the currency.

Thank you for reading and I welcome any comments or business inquiries with regard to personal assistance with the timing and planning of any international currency transfers.

Thank you for reading and please contact me directly on jmw@currencies.co.uk to discuss further.

Pound to Australian Dollar Rates Move Higher Towards 1.80 (James Lovick)

The pound to Australian dollar exchange rate has moved higher towards 1.80 for the GBP AUD pair having found support after the historical vote in the House of Commons on Tuesday this week. UK Prime Minister Theresa May was able to win the vote of no confidence in the government which took place last night having been put forward by Labour leader Jeremy Corbyn. The Brexit negotiations continue to be the main driver for GBP to AUD and the markets now await a statement from the British prime Minister on Monday having lost her vote by a staggering 230 votes.

The pound has found some support as it is becoming increasingly clear that there is not a majority in the house of Commons for a no deal Brexit, even though the default option in the event of a no deal is enshrined in law. The markets at least appear to be feel more relaxed that a no deal is not a likely outcome anymore and this is helping to support the price of sterling. Clients looking to buy or sell Australian dollars are likely to see a hugely volatile period in these coming weeks ahead of the UK’s withdrawal from the EU 29th March 2019.

UK retail sales date are released tomorrow where a small drop is expected although the headline figure should nonetheless look healthy taking into account spending on the high street over the festive period. Next week sees important unemployment data which also includes the wage growth numbers, something the Bank of England monitors very closely to determine its monetary policy.

The Australian dollar meanwhile is also struggling as continuing concerns over global growth hamper AUD to GBP. With a serious trade war still yet unresolved between the US and China and evidence of a downturn in the global economy the Australian dollar could be set for some tough times ahead. There are talks of China looking to stimulate their economy through injections of cash and also tax cuts which could help see a boost of the Australian dollar although these measures may take some time to have any effect.

For more information on the Australian dollar and how to make the most of any opportunities when transferring funds then please feel free to contact me James at jll@currencies.co.uk

Will next week’s vote on May’s Brexit deal cause movement for GBP/AUD?

The Pound has been trading within relatively thin volumes this week against most major currency pairs as the currency comes under pressure in the lead up to next week. On the 15th of this month, which is next Tuesday there will be a ‘meaningful vote’ on Prime Minister, Theresa May’s Brexit plan and much of the speculation this week revolves around that date.

The Australian Dollar, despite being the biggest loser in terms of currency throughout 2018 of the G10 countries, has actually been increasing in value over the past week as hopes of a agreement between the US and China over the trade war talks increase. There have been ongoing discussions recently between the two leading economies, and this is a positive for Australia as China is the country’s main trading partner.

So far this morning the Pound has got off to a poor start, as pressure builds in the lead up to next week’s vote, especially after the first planned vote was delayed as May was concerned of a major loss. The latest Brexit related update is that yesterday evening Parliament voted in a new amendment specifying that the government has 3-days to report back to the commons with its ‘plan B’ in the event that May loses next week.

Economic data is taking a back seat at the moment owing to the importance of UK politics at the moment, but it’s worth being aware that on Friday there will be UK GDP figures released at 9.30am with growth of 0.1% expected. I would expect to see a drop in the Pounds value if this figure disappointing especially if the figure shows a negative figure.

If you wish to be updated and to plan around what could be a busy week for the GBP/AUD pair, do feel free to register your interest with us.

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.

 

Brexit continues to be the main influence on GBP/AUD (Daniel Johnson)

Could Brexit January 15th vote simply lead to another?

GBP/AUD rates continue to be largely dictated by Brexit. Theresa May has now confirmed 15th January as the date that parliament will vote on her current deal. The vote was originally delayed due to May’s lack of confidence in the deal going through. European Commission President, Jean-Claude Junker has said there will be no changes to the current deal and he is only willing to clarify the current terms. Could it be the case that Junker will make concessions? Or could the threat of a no deal Brexit force a vote through?

May has suggested if the deal does not go through at her first attempt then there will be a second vote, this could point to out that she feels Brussels will change it’s stance. There is still a huge lack of clarity surrounding Brexit which is not sitting well with investors. The majority of scenarios are Pound negative, but if May were to be ousted or resign we could see a second referendum back on the table.

If May’s deal does not go through we  could see a leadership challenge from Corbyn or indeed we could see her resign if it looks like the deal will have no chance of going through, although  I don’t take her for a quitter. I am not a particular fan of May, but you cannot help but admire her perseverance.

If you look historically if a country loses it’s leader the currency in question would weaken, however in this situation it will be interesting to see how the market reacts. We could see an initial fall due to political uncertainty, but if it appears a second referendum comes to the forefront it is widely predicted that the vote would come in in favour of remaining in the EU according to polls. This could boost investor confidence and in turn the pound.

Would I be hanging on for this if I was selling Sterling?

The answer is no. The majority of Brexit outcomes  result in Sterling weakness, if you have to move short to medium term I would be looking to take advantage of current levels or at least a tranche for safety. The ongoing trade war between the US and China is a concern for the Aussie and if it were not for Brexit I think Sterling would be experiencing gains against AUD, unfortunately the lack of clarity surrounding Brexit is outweighing the trade war.

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 16yrs, Foreign Currency Direct Plc. We are a no risk entity as we do not speculate on the market and we are registered 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.