Tag Archives: AUD weakness

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.

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.

 

Political turmoil drives the Aussie!

The Australian dollar has really weakened this week as investors struggle to make sense of the uncertainty present in their current political situation. The current Prime Minister is now Scott Morrison, after the ousting of Malcolm Turnbull. Interestingly, the Australian has risen today as the news has settled the immediate uncertainty of a leadership contest.

The Australian dollar had been rising on the improved economic outlook for Australia, investors were backing the RBA, Reserve Bank of Australia to raise interest rates in the future but it really is likely to be longer term. In particular this uncertainty over the economic outlook could prove very damaging for interest rates as investors shy away from making any key decisions with the uncertainty present.

The big question now is whether Mr Morrison can hang on to the position or will he have to call an election to justify his position? Any signs of an election or the actual announcement of an election down under would see the Australian dollar much weaker, clients looking to buy or sell Australian dollars could find themselves in a volatile market if this happens.

The Australian dollar has also risen today on the expectations that there has been progress with Chinese trade talks which might have previously seen the Australian dollar weaker. Whilst the trade wars are bad news, the expectation that they will not massively deteriorate and see huge damage to the Australian economy might help the Australian dollar.

Finally, events concerning Donald Trump should also be a market mover on the Australian dollar, you never quite know what Donald Trump will do or say which can move rates! Lately, the weaker US dollar we have seen has helped the Australian dollar to rise. Further woes and concerns surrounding Donald Trump and his government could lead to a stronger Australian dollar.

For more information on the best rates and strategy to move money internationally at the best prices, please speak to me Jonathan Watson by emailing jmw@currencies.co.uk

Downward trend for GBP/AUD continues, is a move towards 1.70 now a possibility?

The Pound to Aussie Dollar exchange rate has been weakening ever since hitting its highest level of the year back in April of this month. Back then the rate was 1.8450 and at the time of writing the rate has since dropped to levels 10-cents lower than this.

This price movement can be attributed to a number of reasons, with Brexit uncertainties perhaps at the top of the list. When the Pound was trading at its 2018 high vs the Aussie Dollar this was back when there appeared to be a clearer Brexit plan along with expectations of interest rate hikes. Since then although there has been a rate hike the Brexit plan has become unclear with infighting amongst the current government, a number of key resignations and also the probability of a ‘No Brexit Deal’ overtaking the chances of a deal being in place when Brexit begins next year.

AUD exchange rates have also benefited now that US – China trade talks have eased, as Australia is likely to be negatively affected if a trade war heats up and global trade slows. The close proximity to China is another reason for AUD sellers to be weary of this topic as China is also Australia’s biggest trading partner.

Moving forward Brexit is likely to be the biggest market mover for the pair, although there are economic data releases that can influence the rates. This week at 9.30am UK time there will be the release of Public Sector Net Borrowing cost for July. This figure will be out of the UK and an increasing figure on the previous one is likely to result in a downward movement for the Pound.

Also on Tuesday is the Reserve Bank of Australia’s Minutes report which could also result in market movement. There are no interest changes expected from the RBA until next year, but expect any allusions to result in market movement.

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.

 

Turkish situation helps the Pound (Daniel Johnson)

GBP/AUD – Sterling has gained ground against against the Aussie of late. I would not put this down to Sterling strength however. I think the rise in the Pounds value can be attributed to a lack of investor confidence in commodity based currencies following the situation in Turkey.

With the severe fall in Turkish Lira and the lack of monetary policy intervention investors have been seeking safe haven investments. If the US-Turkish trade war escalates this could again have knock on affects to the Australian Dollar. We have seen the situation ease in the last 24hrs as Qatar have offered financial support to Turkey.

Despite the Australian monetary policy outlook not being particularly favorable the uncertainty on the Brexit situation outweighs any concerns for the Australian economy.

GBP/AUD now sits just above 1.75. I believe there is potential for Sterling to fall further due to the lack of clarity surrounding Brexit. With a “no deal” scenario still a possibility the Pound remains anchored at low levels against the majority of major currencies.

If you have to move short term buying the Aussie I would take advantage of current levels.

If you have a currency requirement I would be happy to assist. If you wish to maximise your return it is important to be in touch with an experienced broker. If you let me know the details of your trade I will endeavour to produce a trading strategy to suit your needs. If you have a currency provider in place I am willing to perform a live comparison and I am confident I will be able to demonstrate a considerable saving. It will only take  a couple of minuites and could be well worth your while.

You can trade in safety knowing your trading with Foreign Currency Direct PLC, a company  trading for over 16 years. Our accounts are published online at companies house and we are FCA registered.

If you would like my help I can be contacted at dcj@currencies.co.uk. I look forward to hearing from you.