Category Archives: Australian Dollar Weakness

Australian dollar Falls after Chinese Arrest by US Authorities (James Lovick)

Despite the Brexit uncertainty ahead of a crucial parliamentary vote next week the pound to Australian dollar exchange rate has recovered after the CFO of a Chinese Telecoms giant Huawei was arrested in Canada by US authorities after allegedly breaching US Iranian sanctions. There was recent optimism for a cooling of trade tensions after the G20 summit last weekend following a positive talks between US President Donald Trump and Chinese leader Xi Jinping.

A 90 day pause on future trade tariffs was agreed to try and find a way forward which in fact helped strengthen the Australian dollar. This new political upset could make the negotiations difficult especially if there is an escalation of events. Rates for GBP to AUD have now moved higher to 1.7650 for the pair.

Those looking to buy Australian dollars with pounds should be braced for major volatility around the time of the meaningful vote to be held in parliament on the terms of the withdrawal agreement and political declaration. It is looking highly unlikely that she will win the vote and the markets are now speculating as to how many votes she loses by. If she lost by under 100 the feeling is that this would be manageable and she could possibly go to Brussels in the hope of finding a solution to the Irish backstop. However there is talk that the number could be more like 200 which could see the Prime Minster go at this crucial stage at the end of the Brexit process.

Some Conservative members are suggesting delaying the vote to find a solution and to ovoid what could be a fatal defeat for Theresa May. The outcome of this vote will almost certainly dictate the future direction for the pound and clients would be wise to plan around this event. The volatility to follow could be similar to that seen after the Brexit referendum in 2016. Should a deal eventually be reached between Britain and the EU then there could be major gains for the pound and a good opportunity for buying Australian dollars. The risk of a no deal scenario though cannot be ruled out and is probably looking the more likely of the two options.

I have been helping clients move their funds to and from Australia at excellent rates of exchange for fifteen years. For more information and guidance timing your exchange around these events please feel free to contact me James at jll@currencies.co.uk

Australian Dollar strengthens following China/US Truce (Daniel Johnson)

Trump holds back on Tariffs

Following the G20 in Buenos Aries the United States and China have called a truce on their trade war. On Saturday Trump agreed to hold back on new tariffs and President XI Jinping has pledged to increase Chinese purchases on US goods. Be wary of thinking this trade war is over however, further negotiations are ahead and they are set to be time consuming and problematic. Both leaders still seem to be holding their stance on the key problems of trade.

Trump has agreed to postpone a plan to raise tariffs on USD 200bln worth of goods to 25% from 10% in January. The Chinese have agreed to increase their purchases of industrial, agricultural and energy products which China had hot with retaliatory tariffs after Trump had implemented a wide range of tariffs.

There are now set to be 90 days of talks and Trump has threatened that if the trade differences are not resolved he will proceed with his 25% tariff.

Brexit Farce continues

The Truce has caused a spike in Australian Dollar value making further gains against Sterling which is also being weighed down by the complete farce which is Brexit. May’s Brexit deal is due to be voted on by parliament on 11th December and it is being widely criticised. If the vote does not go through Labour will challenge May’s position which would no doubt hit the Pound further. There is also the possibility that if the deal is not voted through amendments will be made before a second vote within 14 days of the first. I hope this is the more likely outcome as the alternative would mean chaos and no doubt sterling will take a severe hit.

I am afraid short term Sterling has little chance of making any significant gains against the majority of major currencies. If you have to move short to medium term I would consider performing a tranche at current levels.

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.

 

 

 

Will the current Brexit deal make it through Parliament? (Daniel Johnson)

GBP/AUD – Brexit continues to be the main driver on GBP/AUD. Despite little movement on the market we did see significant progress in negotiations this weekend. Yesterday saw the current Breixt draft agreed. The deal was accepted by Brussels after just 38 minutes. All 27 member states endorsed the agreement after 18 months of  uncertainty. The £37 billion exit fee was confirmed along with the elusive back stop agreement on the Irish Border. It also gave an insight into trade relations moving forward.

Perhaps the reason we did not see a boost in Sterling was that the market had already moved on rumour. It was common knowledge that the deal would go through following May conceding on the Gibraltar situation. Investors are aware the real test for the deal is when it is put before parliament for acceptance. This is expected to take place in the next two weeks prior to the Christmas recess.

May has also released an open letter to the public in an attempt to get support for the deal. She has stated it is this deal or no deal. The majority pf book makers have it at around 50/50 the bill will be passed.

Theresa May’s position under Threat

Theresa May’s position is still under threat, there are rumours of around 35 letters of no confidence that have been put forward, 45 are required for a leadership challenge. It may be the case that some MPs are hanging on for an opportune moment as a leadership challenge can only be undertaken once over a 12 month period.

While the deal has not been approved by parliament I expect the Pound to remain vulnerable. If I had to put my money on it I would say a deal will go through. The threat for the Tories is that if a leadership challenge takes place and the potential new leader fails to gain a majority victory they could be looking at a general election and risk Labour gaining power. Brexit would also be thrown completely up in the air. No doubt this would cause Sterling weakness.

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 endeavor 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 16yrs 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.

GBP to AUD Exchange Rates Uncertain ahead of EU Summit 25th Nov (James Lovick)

Pound to Australian dollar exchange rates remain on the back foot as uncertainty over Brexit continues to the big driver for GBP to AUD rates. The pound is trading at just over 1.76 against the Australian dollar and whilst there has been some support this week any major improvement is likely to be limited for the pound. UK Prime Minister Theresa May is still trying to seal a deal on the political declaration for the future trading relationship between the UK and EU and a meeting last night failed to provide a breakthrough. Theresa May will now fly back to Brussels on Saturday ahead of the emergency EU summit which commences on Sunday.

The political declaration will be an important component to the deal and the specific wording of the text will help determine whether parliament will vote in favour of the deal that is almost on the table. Ultimately it will all come down to a meaningful vote in parliament on the final deal which will decide the future of the UK and the pound in the short term. It leaves a very uncertain few weeks for sterling exchange rates whilst the markets await this key vote in parliament.

The Australian dollar could come under some renewed pressure in these coming weeks as the issue of trade wars continues to impact on global markets. So far there has been no compromise for a future trade deal between the US and China as preparation are being made behind the scenes for a summit in Buenos Aires. Relations are likely to become even more tense as both Europe and China seek to argue that Donald Trump cannot continue to impose tariffs on steel and aluminium on the basis of national security.

The World Trade Organisation (WTO) will need to rule on this subject and the outcome will likely create added turmoil in the financial markets. If for example the WTO challenged the US on this point then in an extreme scenario the US could find itself breaking away from the WTO entirely. This could see a flight to safety to the US dollar leaving the Australian dollar in a risky position. Once again there is another focal point in the diary which will help direct GBP vs AUD.

For more information on Australian dollar exchange rates and how to find the optimum time to convert funds either buying or selling Australian dollars then please feel free to get in touch with me James at jll@currencies.co.uk

Aussie Dollar comes under pressure as US-China tensions resurface, and fears of a global slowdown take hold

The Australian Dollar has come under pressure in early trading today, although the fall has a lot further to go to wipe out the gains made by AUD over the past month and a half. Against the US Dollar the currency has lost over 1% over the past 24-hours as investors have piled into safe haven currencies and taken funds out of riskier currencies such as the Aussie.

Over in the US the Federal Reserve Bank has indicated plans for a less aggressive monetary policy next year than the markets had previously anticipated, and signs of a global slowdown with stock markets still selling off is concerning financial markets hence the sell-off.

AUD exchange rates haven’t been helped by comments out of the White House yesterday either. In the lead up to the G20 meeting next week there have been hopes of a truce between US President Donald Trump, and Chinese President Xi Jinping, but yesterday as the White House said Beijing has failed to alter its ‘unfair’ practices. As China is such a key trading partner of Australia’s this is negative news for AUD which perhaps explains yesterday’s sell-off of the Aussie Dollar.

There are no economic data releases out of Australia this week, so I expect the GBP/AUD rate to continue to be driven by Brexit related updates which are coming through thick and fast at the moment. UK PM, Theresa May will be in Brussels today to discuss the Brexit agreement text with EU leaders for the first time since the text was announced last week.

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.

 

Housing market a concern for Australia

Over the last year Australian banks have found themselves tightening lending standards to the recommendations given by the Royal Commission in Australia and reports are suggesting further recommendations are on the horizon. Research found that banks were not checking peoples incomes and spending patterns correctly which meant the public were borrowing money they could not repay.

Early next year the Royal Commission are set to release their final report in regards to lending and if the commission decides further tightening is needed this is going to have a major impact on the Australian housing market and consequently the economy and dollar. If the banks stop lending UBS believe that the market will crash 30%. It’s key to note that house prices have dropped 13% in Perth and the figures are similar in other major cities.

For clients that are holding Australian dollars and are looking to purchase a foreign currency in the months to come, I’m expecting the dollar to have a tough start to 2019. It’s clear in my opinion that the Reserve Bank of Australia have their hands tied in regards to raising interest rates. House prices are falling and no ‘new’ money is coming into the market. If the RBA hiked interest rates it would put further pressure on Australian’s pockets and you would see people trying to sell their houses for cheaper and the housing market would fall further.

However it’s always important to analyse the other currency you will be converting. For example the pound is back under pressure due to Brexit, and opportunity has presented itself. If Theresa May manages to get the Brexit deal through Parliament you would expect the pound to strengthen in the upcoming months and the Australian dollar will lose value against the pound.

However on the other hand the US economy has been producing magnificent economic numbers over the last 12 months, however reports are suggesting a slow down in raising interest rates is on the horizon and now that Trump has lost the House, next years congress is going to be extremely interesting. Will they ask to see Trump’s tax returns and could this put major pressure on the dollar?

For more information in regards to a specific currency pair feel free to email with more information and I will get back in touch as soon as possible drl@currencies.co.uk.

 

 

Australian Dollar loses ground against most major currencies as trade war tension rises

Australian Dollar exchange rates have dropped away against all major currencies in treading today as tensions between the U.S and China rose once again over the weekend.

The Australian Dollar, Canadian Dollar and New Zealand Dollar topped the weakest major currencies of the day and much of this can be pinned down to the uncertainty surrounding the trade negotiations between Donald Trump and Xi Jinping.

As many regular readers will be aware any heightened tensions between the U.S and China can lead to weakness for the Australian Dollar, as the Australian economy can be susceptible to bad news from China.

 RBA meeting minutes tomorrow morning

We have seen a slight improvement in certain areas of the Australian economy recently, however most analysts do not believe that there has been enough to warrant a change in stance from the Reserve Bank of Australia regarding any interest rate changes. Interest rates have remained stable in Australia for a long time now and this is also another reason why the Australian Dollar has lost ground against a number of major currencies over the course of the year.

An higher interest rate will make a currency more attractive to investors as it means they are offered a greater level of return for their money, and with other central banks such as the Federal Reserve in the U.S raising rates on numerous occasions over the past year or so the Australian Dollar has been somewhat left behind.

Should the RBA take a more positive tone in their meeting minutes tomorrow then we may see a little strength back for the Australian Dollar, should their stance remain the same then focus will be back on any political news, such as the trade wars and for those that have an interest in the Australian Dollar against the pound then Brexit and Theresa May will be key.

Should you have the need to buy or sell a large volume of Australian Dollars in the near future and you would like my assistance then you are welcome to contact me (Daniel Wright) directly. You can email me on djw@currencies.co.uk with a brief description of what you are looking to do and I will be happy to contact you personally.

 

Does May have the backing to get her Brexit Plan through in January? (Daniel Johnson)

GBP/AUD – GBP/AUD again has fallen below the key resistance point 1.80. This was due to news Theresa May lacks support from the cabinet to push her Brexit plan through. It seems that every time the UK on the cusp of a deal there is a problem created not only from Brussels, but also from inner fighting within parliament.

It seems the Chequers plan was reluctantly backed in the first place due to the need for progress and the threat of a no deal. The backing of the deal has been described as a deeply undesirable compromise. A minster said that most of those who backed the deal did so “with a very heavy heart”.

Two cabinet ministers last night announced on the BBC that there is little chance that  the current deal would get through parliament and the Theresa May still pursuing agreement on the is deal could be considered “self harming”.

Even if a deal is agreed with Brussels the deal must then be voted through by the cabinet in January.

The EU withdrawal Act of 2018 highlights that the government must announce before 21st January  if it can or cannot reach a deal. If the date in not met the government will have 5 days to make a statement outlining how the UK wishes to proceed and subsequent arrangements for the motion to be passed through parliament.

Despite all this news I am still of the opinion a deal will be reached despite all the in house fighting, the consequences of not getting a deal is simply too great. Talks are intensifying and if there is solid news on the Irish Border I think we could see a Sterling rally. If you are looking at risk reward and are selling the Australian Dollar I would not hesitate to take advantage of current levels at 1.78. Pre-Brexit GBP/AUD was 2.20, although I do not expect a rally of this extent I think it is important to remember Sterling is chronically undervalued.

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

 

 

 

 

RBA interest rate decision tonight to impact Australian Dollar exchange rates – Positive Brexit news helps the Pound make gains against Australian Dollar

In terms of Australian Dollar news, all eyes will be on the RBA interest rate decision and monetary policy statement overnight tonight. One of the key factors that has led to Australian Dollar weakness over the past few months has been the fact that interest rates have remained static at a record low now for 26 months.

With other economies such as the U.S gradually raising interest rates we have seen a huge flow of money out of the Australian Dollar and into the U.S dollar as investors seek a better rate of return in what is perceived as a safer and more stable currency.

Historically a higher interest rate has strengthened a currency as it makes it more attractive to investors. It is now expected that due to the spiralling household debt and house prices in Sydney and Melbourne dropping off significantly in the past 12 months, an interest rate hike may only add pressure to the economy, so the RBA may remain reluctant to make any bold moves for the time being.

The rate is unlikely to change tonight but the rate statement will be key, as speculation on any future changes will move the markets accordingly.

We have seen a slight uplift in the value of the Pound against the Australian Dollar in the past week or so, this has been mainly down to apparent Brexit progress and the U.K seemingly edging closer to an initial deal with the EU.

As many regular readers will know the Australian Dollar exchange rate against the Pound is fairly susceptible to Brexit news, and the fact that things are looking up for the U.K negotiations team has led to strength for the Pound.

All in all this is an important time for the Australian Dollar, with trade wars between Trump and China seeming to progress, interest rates remaining static and for those looking to carry out an exchange involving GBP having Brexit to contend with too it really is vital that you have an experienced and proactive currency broker on your side.

If you would like my assistance then I have helped thousands of people buy or sell Australian Dollars for well over a decade and I will be happy to have a chat with you to see if I can assist you too.

Feel free to email me (Daniel Wright) on djw@currencies.co.uk and I will be more than happy to have a no obligation chat to discuss a pending transaction with you. Not only should I be able to help you achieve a better rate of exchange than you are currently being offered but I would like to think our level of service is second to none too.

 

Could we see further gains for AUD? (Daniel Johnson)

GBP/AUD – We have seen gains for the Australian Dollar against sterling of late, however I think this is more down to current situation with Brexit rather than positive news on the Australian economy. I believe Sterling would be making advances against the Aussie were it not for the debacle that is Brexit.

GBP/AUD currently just sits above 1.80, testing what has been a key resistance point in the past 12 months. I am of the belief we could see further Aussie gains as Brexit talks intensify. If I had to make a call on what I think will occur, it will be that talks will go the eleventh hour and a deal will be agreed. The last date at which a deal can be agreed will be the EU summit in mid-December, I would expect there to be a significant Sterling rally, but keep in mind that if a deal is agreed it will have to be voted through by the House of Commons in January, if it gets the OK expect GBP to gain further ground.

Although December is the EU summit where I expect a deal to be agreed. If I was an Aussie seller I would be wary, if a deal is coming close to fruition it will be in the press and the markets will react, the market moves on rumour as well as fact. Keep in mind pre-Brexit GBP/AUD sat above 2.20. There are dangers for the Aussie due to the Chines – US trade war. Australia’s heavy reliance on China purchasing it’s raw materials is a burden in this circumstance. The tariffs in place are hurting Chinese growth which in turn is hurting the Australian economy. The trade war is set to intensify and be prolonged. During times of global economic uncertainty investors flee riskier commodity based currencies such as AUD in search of safe haven investments with higher returns. If I was selling Aussies I would take advantage of current levels or if you have a high risk appetite consider performing a tranche at current levels for safety.

If you have a currency requirement, please do get in touch I will be happy to assist. Yo can drop me a mail at dcj@currencies.co.uk.

Thank you for reading. Daniel Johnson.