Tag Archives: AUD weakness

Australian dollar forecast – Increased volatility set to continue…

The Aussie dollar is being pulled in many different directions at present, as the market is encouraged to consider and take onboard many factors in its assessment of the value of the currency. Domestic economic and political concerns are high ahead of the Australian election this weekend, as are global concerns over trade wars and the impact on the Chinese economy. The Aussie dollar is softer this May under the pressure of such events, and I think may well lose further ground.

The elections this weekend could well see the Labour Party winning the election as their messages on climate change and improving health and education spending appear to hit the right notes with voters. This might well see the Australian dollar weaker after the weekend, since it is expected the increase in spending, might lead to worse economic performance and increase pressure on the Australian central bank, the RBA (Reserve Bank of Australia), to cut interest rates.

Looking forward, investors with a position to buy or sell Australian dollars might wish to be making some plans ahead of the election this weekend to try and protect or manage their position. You can email myself Jonathan Watson on jmw@currencies.co.uk to learn more about this if you wish.

Will the Australian dollar weaken further?

Another concern for me would be the escalating trade wars which so far has seen the US and China, both raise tariffs on each other’s good. Trump has now levied 25% tariffs on US$200 bn worth of Chinese goods, whilst China has retaliated with between 5-25% tariffs on US$60bn worth of goods.

This just adds to the uncertain picture ahead for the global economy and I would expect will lead to a weaker AUD. Whilst the immediate sell off on stock markets and currencies seen earlier this week has been stemmed, with such investments staging a small comeback yesterday, the longer term outlook does not appear rosy.

The Australian dollar is very much supported by a strong global economy, in particular by China and its demand for raw materials. The increased uncertainty globally has seen the Australian economy struggle with inflation at a 16-year low, thereby putting pressure on the RBA to cut rates.

May is presenting much potential for the Australian dollar to come under some pressure, clients with a position to buy or sell Australian dollars might benefit from a quick review with us to discuss the best strategy moving forward. Please feel free to contact myself Jonathan Watson on jmw@currencies.co.uk to discuss more about what might suit you best in this market.

Thank you and I look forward to hearing from you.

Australian dollar forecast : Australian dollar remains in the firing line!

The Australian dollar was always looking like it may struggle in the month of May, and so it has proved to be the case. A series of domestic and global events have all led to increased pressure on the Australian currency, as investors fear over the more immediate political and economic outlook.

On the side of the domestic issues facing Australia, there are numerous economic concerns including inflation being at a 16-year low with stagnating Unemployment a further concern. The Reserve Bank of Australia (RBA) has because of this been under pressure to cut interest rates and it is widely expected will cut at future meetings.

The raising and lowering of interest rates is a big factor in the strength and weakness of a currency, the current projection for lower interest rates down under will only serve to put more pressure on the currency in the future.

Politics is also key in Australia with the national elections due on the 18th May, there is a concern this could be a Labour government which would potentially see the Australian currency weaker. There has been a growing concern over the economic outlook and a Labour government and their spending plans could easily see a weaker currency.

Finally, the global events which are also concerns for the Australian dollar are numerous. This includes the trade wars between the US and China which could see the lack of any agreement weighing on global sentiment and hamper trade confidence in the global economy. As a global currency, the Australian dollar will weaken in times of uncertainty over the global economic outlook and the trade wars are a great example of this.

Moving forward, the Australian dollar looks like it will remain under some pressure and could easily weaken further. A sudden change in sentiment could easily develop however, and clients looking to predict and track movements on this currency should be aware of the potential for a sudden reversal.

To discuss strategy and ensure that you are fully up to date with the latest trends and themes in the market, please don’t hesitate to contact me Jonathan Watson to discuss further on jmw@currencies.co.uk.

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

Aussie Dollar weakens as rate cuts look likely, how could this impact the Aussie Dollar?

The Australian dollar has had a bad week after hitting the lowest levels of the month against the Pound, and also the lowest levels in 2-months against the US Dollar.

Those of our readers planning on making Pound to Australian Dollar exchanges should be aware that the current levels are within 4-cents from the annual highs, which are also the highest levels seen since June of 2016 making this years annual high the highest levels seen in 34 months.

We’ve witnessed a sell-off in the AUD’s value this week after some disappointing inflation data was released on Wednesday, demonstrating that inflation levels down under are running at a 16 year low. Many economists now believe that there will be at least one interest rate cut this year and that there will be one in June in order to try and stem the weak inflation levels. Up until this point the Reserve Bank of Australia has been loath to hike rates so as to not impact the already overheating property market, especially on the East coast but this week’s data may have been the nail in the coffin.

Moving forward I’m expecting to see AUD continue to soften proving cuts take place, as should they occur the base rate of interest will be at another record low.

If you are planning to make a currency exchange involving the Pound and another foreign currency, it’s well worth your time getting in contact with me on jxw@currencies.co.uk in order to ensure you make a well informed decision on when to make that particular transfer, as well as benefiting from highly competitive exchange rates from one of the UK’s leading foreign currency brokerages. Just provide me with a basic outline of your currency requirement and I will be back in touch with you as soon as possible.

Will the Australian dollar weaken this week?

The Australian dollar exchange rate has been trending lower in 2019 on the increased expectation that we will in the future see the RBA, Reserve Bank of Australia cut their base interest rate. Numerous commentators have for now many months been commenting that we could soon see the RBA forced to take action against numerous global and domestic factors.

In Australia there has been a growing concern over Inflation levels which the RBA had targetted to see at 2-3% but has been averaging around 1.5%. To boost Inflation levels which are now at close to 10 year lows, the RBA might need to cut interest rates to help provide some stimulus to the economy.

Cutting interest rates by a central bank can do various things which can help an economy to grow. Firstly, it can make the currency cheaper to buy which can help the country to increase exports, thereby improving the economy. Secondly, it makes loans and borrowing less costly which can encourage business and consumers to spend more, thereby increasing economic activity.

The currency becomes less valuable from the cutting of interest rates in a similar fashion to the way a lower or higher rate of interest makes a particular savings account more or less attractive.

Interest rates are of importance on the Australian dollar and are a major factor in determining the relative strength or weakness of the currency. There is a growing expectation that we could in the future see the RBA cut rates which will see the currency weaker.

It is not just the domestic issues of a sluggish economy, it is also the ongoing uncertainty surrounding the more global problems and concerns which are relating to the economic outlook on global trade.

A key example is the ongoing Trade Wars and spat between China and also the US, this has seen global trade drop and with China being such a key partner to Australia, could continue to be a major factor.

With such global pressures on trade continuing, as evidenced by the United States Federal Reserve stating they will not be raising interest rates as soon as many thought earlier this year, the Australian dollar might continue to suffer from weakness, as it responds to continuing and ever-changing global shifts.

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.

 

 

 

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.

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.

 

 

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.

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.