Tag Archives: AUD

Underperformance Is the Key Word This Week for the Australian Dollar, with QE Predicted in 2020

The Aussie Dollar has been suffering lately, with no luck going into the latter end of this week either. Despite the RBA’s governor Philip Lowe suggesting that QE was not a tool to be used right now, he failed to remove it out of the question altogether and this has instilled fear of QE being utilised in early 2020.

QE Looking Likely for the RBA in the Early Stages of 2020


Economists have tipped QE for the RBA in early 2020. The current target for inflation has not been met and this has thrust the QE or negative rates into the question for the RBA. The markets are beginning to fret whilst the labour market deteriorates despite interest rate cuts from the bank. To rub salt into the wounds of the AUD, the global economy is still dragging its way through a slowdown. However, Lowe stated on Tuesday that extreme policy actions like these will be unlikely for Australia as the AUD growth should pick up next year.

What Would QE Mean for the Aussie Economy?


QE refers to the creation of new money from the RBA in order to buy government bonds and force their yields lower. These yields are integrated into all the interest rates that are charged across economies so when they are forced lower from central banks an indirect reaction of a reduction in borrowing costs for companies and households is also induced. The general idea with this is that low borrowing costs leads to more spending which ultimately can help lift inflation towards a predetermined target. However, in doing so QE means a lower return for investors and a more unattractive currency.

Us-China Trade Talk Looks to Break down Once More, AUD Looks to Suffer


For weeks the AUD has been banking on a successful trade deal between the US and China. Things appeared to be going well recently, but news broke yesterday that President Trump has signed the Hong Kong Human Rights and Democracy Act into law this week which has sparked immediate reaction from China. Investors are now worried that a breakdown could come to light as China sent threats of retaliation to the decision. The AUD is heavily reliant on the Chinese economy and therefore, should the deal not go through, it will likely face losses.

Feel free to email me, Dayle Littlejohn if you would like to know more on the factors affecting the AUD/GBP pairing or have an upcoming currency transfer drl@currencies.co.uk.

AUD Outlook Looks Optimistic Amidst Recent China Comments and Federal Reserve Meeting

Things were looking up for the Australian dollar yesterday as positive comments from China concerning the trade war drove up the confidence, boosting the AUD. Alongside this, the Federal Reserve (Fed) meeting which took place may have aided sentiments towards the global economy but with the Fed taking a backseat after recent interest rate cuts this could spell bad news for the AUD.

US-China Trade Deal Looks Promising Once More but Trump Refuses to Budge

Since its beginning, the ‘Phase One’ trade deal between the US and China has been rocky to say the least. Several ups and downs have been experienced with each country wanting the best deal possible for themselves. News broke yesterday which highlighted that Chinese Vice Premier Liu He is taking a cautious but optimistic approach to the potential trade deal. He mentioned that China is looking for a deal which would at least end the current conflict between the two countries. A positive deal would fare well for the AUD as it is closely linked with the Chinese economy.

President Trump however looks to shake up the optimism as his recent comments about the trade deal seemed indifferent. He mentioned that despite the progress going “very nicely” with China that the US is taking in billions of dollars as things stand and he admitted that he felt China were not stepping up to the level he would have hoped for. Another comment made by Trump following a tour of the Apple Manufacturing Plant in Austin; ‘We are dealing with China. I have a great relationship with President Xi. They’re a great country, but we’re a greater country than China’ is likely to ruffle a few feathers and sent pessimism sky-rocketing.

Federal Reserve minutes released

The minutes from the meeting that took place yesterday revealed that sentiments expressed in Congress last week were widely held on the Federal Open Market Committee (FOMC) of rate settlers. The Committee came to a consensus that the US monetary policy is “well calibrated” and thus will go forth in taking a material reassessment of the outlook to change that. The near-term driver for the USD will be its deal with China, this would likely support the Dollar outlook which could boost the global economy, benefiting other currencies like the AUD too.

The Federal Reserve hinted that its rate cutting cycle appears to be over for now but this gives way to the ebb and flow of trade-related headlines to be the biggest drivers of currency markets in the time to come. This may not be positive news for the AUD as it is approaching a ‘resistance level’ on the charts which suggests an uphill struggle is ahead, even at the best of times for the Australian Dollar.

Feel free to email me, Dayle Littlejohn if you would like to know more on the factors affecting the AUD/GBP pairing or have an upcoming currency transfer drl@currencies.co.uk.

Is QE on the cards from the Reserve Bank of Australia? (Daniel Johnson)

Pound to Australian Dollar Forecast

The Australian economy has suffered of late with a drop in house prices, increased unemployment and a cut in interest rates to a record low of 1%. Australia is heavily reliant on China purchasing its goods and due to this the US/China trade war is having an impact on the Australian Dollar.

China is in the midst of its slowest economic expansion in thirty years and the Chinese Yuan continues to drop in value posting a fresh 11 year low on Monday. Dr Adam Triggs of the Australian National University’s Asian Bureau of Economic Research points to the Trade War as a huge contributor to the Australian economy’s recent stalling “We trade a lot more than most countries and we rely on foreign money for investment, so when you start to get international turbulence we feel that a lot more than others.”

The  concerns around the Chinese economy and its drop in demand for Australian goods and services has meant that the Pound has managed to regain a footing above 1.80 on interbank despite the Brexit chaos Boris Johnson has been inflicting since taking over as Prime Minister.

As Australians interest rates follow the global trend of cuts there has been much speculation over the Reserve Bank of Australia’s, (RBA) next step in efforts to stimulate economy. For some time Westpac has led calls for the Reserve Bank to consider a further cut to 0.5% while Deutsche Bank says it expects the cash rate to drop to just 0.25% by as early as the end of this year. However, Philip Lowe the governor of the RBA has ignited a debate over whether Quantitative Easing (QE) would be the next step for the RBA. QE is essentially pumping money into an economy in order to stimulate growth. It is a controversial monetary policy as historically results have been mixed, it is far from a proven method and can also put the country in question in huge levels of debt. In the face of an economic crisis when he commented “we are prepared to do unconventional things if the economy warranted it” when questioned in Parliament.

During unpredictable times you may wish to be in contact with a currency specialist who can provide the latest currency updates. Foreign Currency Direct PLC has specialised in foreign exchange for over 19yrs and we are authorised as an e-money institution by the FCA. If you already use a provider, I can perform a comparison within minutes, to give you an indication of the potential saving you could make by using Foreign Currency Direct. If you would like my assistance I can be contacted at dcj@currencies.co.uk.

 

Could we see Monetary Stimulus from the RBA? (Daniel Johnson)

Pound to Australian Dollar Forecast

This year the Reserve Bank of Australia (RBA) has continued to cut interest rates leaving the base rate at a record low of 1%. The change in monetary policy has so far failed to stimulate growth in the Australian economy which has resulted in the RBA board looking at  alternative methods of stimulus to try and aid the struggling economy.

There is the potential that quantitative easing (QE). QE is essentially pumping money into an economy in order to stimulate growth, printing money causing huge levels of debt.  The minutes of the RBA’s July meeting revealed that these unconventional monetary policy measures were discussed.

Both the Pound and the Australian Dollar are under pressure at the moment, although for different reasons as the Australian Dollars are mostly due to economic uncertainty as opposed to the UK’s ongoing political issues.

Over the past year the GBP/AUD rate is almost flat although in recent months the Aussie Dollar has mostly benefited from Sterling weakness which has kept GBPAUD below 1.80 for almost 2-months now.

The time scale for a deal on Brexit does not make good reading. Parliament is not due to reconvene from recess until early September which will leave just under eight weeks for Boris Johnson to get a deal in place. This is something Theresa May couldn’t do in over two and a half years.

Boris has threatened to leave the EU with no deal in place and has said he is not willing to negotiate with Brussels unless they’re willing to drop the Irish back stop. This is something Brussels have stated on numerous occasions they are not willing to do. The situation has not been taken well by investors and sterling has fallen in value as a result.

There is also the possibility of a general election and it will be interesting to see how the market will react. If we look at the 2010 general election for example, we saw sterling lose value due to the political uncertainty, but if Corbyn were to call for an election the probability of a no deal decreases which could cause a rally for the Pound.

The higher probability of a no deal the weaker you  could expect the pound to become.

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

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker if you wish to maximise your return. If you let me know the details of your trade I will endeavour to produce a free, no obligation trading strategy for you. If you have a trade to perform I will also happily provide a free quote and I am confident our rates are among the best in the industry. I would be willing to demonstrate this in form of a comparison with any competitor. You can trade in safety knowing you are dealing with company FCA registered and one that has been trading for 19yrs. Foreign Currency Direct PLC.

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

 

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

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

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

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

If you have a large currency exchange to carry out in the coming days, weeks or months then you are more than welcome to speak with me directly as I will be more than happy to help you both with trying to time a transaction and getting you the top market rate when you do come to buy your currency. A small improvement in a rate of exchange can make a huge difference so for the sake of taking two minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can email me (Joseph Wright) on jxw@currencies.co.uk and I will endeavour to get back to you as soon as I can.

Pound to Australian Dollar Forecast (Daniel Johnson)

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

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

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

Increasing probability of a Brexit No Deal

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

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

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

GBP/AUD rate remain under pressure as Bank of England cuts growth forecast

The Pound to Australian Dollar exchange rate remains close to the lowest levels seen in over 6-months as pressure continues to mount on the Pound across the board of major currency pairs. Since becoming Prime Minister Boris Johnson has ramped up the no-deal Brexit rhetoric and this has rattled the markets which has seen the Pound lose considerable value over the past month or so as his appointment as Prime Minister became a forgone conclusion.

Yesterday the Bank of England opted to hold interest rates where they currently are, but the highlight of the day was BoE governor Mark Carney’s warnings regarding the economic outlook for the UK economy now that a no-deal is looking increasingly likely.

The BoE now expects to see a 33% chance of a recession due to Brexit uncertainty, and earlier in the day the new government outlined plans to spend up to £2.1bn on no-deal Brexit preparations which demonstrates the intent of the new government.

The growth forecast for the UK this year has been cut to 1.3% from the previous 1.6% expectations, and much of the slowing economy is being put down to both uncertainty as well as a lack of foreign investment.

Moving forward we could also see the Aussie Dollar come under pressure, as this week US President Donald Trump has outlined plans for additional tariffs on China and trade talks between the two appear to have stalled once again which has seen a global stock market sell-off. A slowing of the Chinese economy would likely result in a weaker AUD due to the interconnectedness of the two economies.

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.

Aussie Dollar boosted by better than expected Chinese data, could GBP/AUD test its annual lows anytime soon?

The Pound to Australian Dollar exchange rate continues to slide as pressure mounts on Sterling now that the talk of a no-deal Brexit is ramping up. Boris Johnson, the UK’s new Prime Minister has now been PM for just over a week and already during this time we’ve seen sentiment towards Sterling drop as fears of a shock to the economy later in the year and taking their toll on the currency.

GBP/AUD has some distance to fall yet before we begin seeing annual lows, but Sterling has been in the headlines over the past week as GBP/USD has hit a 28-month low and GBP/EUR has hit a 22-month so Sterling is finding itself int he news for the wrong reasons.

The lowest the GBP/AUD exchange rate has been in the past 52-weeks is 1.7210 and at the time of writing it’s currently 1.7635, so as you can see there a bit further for GBP/AUD to fall before it catches up with some of the other major currency pairs. The Australian Dollar has been boosted this morning as Chinese Manufacturing PMI rose to 49.7 in July which is a slight improvement on the June figure and also better than expected. Investors won’t get carried away though as the figure remains below the 50 expansion/contraction benchmark. Strong data released out of China is likely to have a positive effect on the Aussie Dollar due to the link between the two economies, so those of our readers following the AUD’s value should look out for Chinese data.

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.

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

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

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

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

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

If you have a large currency exchange to carry out in the coming days, weeks or months then you are more than welcome to speak with me directly as I will be more than happy to help you both with trying to time a transaction and getting you the top market rate when you do come to buy your currency. A small improvement in a rate of exchange can make a huge difference so for the sake of taking two minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can email me (Joseph Wright) on jxw@currencies.co.uk and I will endeavour to get back to you as soon as I can.

Australian dollar forecast – Will the Aussie weaken?

The Australian dollar has been stronger in recent weeks as investors back the currency, following a series of events which were originally predicted to weaken the currency. Firstly, we saw the trade wars of the last 2 years escalating to the point the Australian central bank were keen to cut interest rates. This saw pound to Australian dollar exchange rates rise to almost 1.88 on the interbank rate. We are currently 1.77, and part of the reason for this is a much stronger Australian currency.

The pound has also weakened following the continued uncertainty relating to the Brexit, which so far has seen the pound losing value as no-deal Brexit becomes more likely, as both Conservative leadership candidates look to keep a no-deal Brexit as an option. It has been said Boris is perhaps more keen on no-deal, with the possibility of him as leader opening a greater prospect of this market viewed, potentially pound sinking option.

This week will see increased news also on Australian interest rate prospects, with the latest Speech by RBA (Reserve Bank Australia) Assistant Governor Kent potentially offering up some news. The market is eagerly awaiting to see if the RBA will be looking to cut levels again in the future, the market has been getting mioxed signals with Chinese growth coming in at 27-year low, but still continuing world beating growth and creating demand for Australian exports.

GBPAUD levels could be influenced by the latest news on the Brexit from the new UK Prime Minister, who will be announced tomorrow morning, before being sworn in on Wednesday evening with a speech planned for around 5pm. Any clients with an interest in GBPAUD exchange rates have plenty of news to be conscious of for this week ahead, please do contact our team to learn more.

Thank you for reading and I look forward to hearing from you soon, Jonathan Watson – jmw@currencies.co.uk