Tag Archives: australian dollar forecast

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

Progress in US/China talks

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

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

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

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

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

Australian dollar mildy firmer after RBA Meeting!

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

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

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

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

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

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

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

Jonathan Watson

jmw@currencies.co.uk

 

Australian dollar at the mercy of global news!

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

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

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

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

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

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

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

Jonathan Watson

jmw@currencies.co.uk

Will the slowdown in China put pressure on the Australian Dollars value?

The main news within the financial markets this morning is the release of 4th quarter Gross Domestic Product from China. The figure is followed closely owing to its importance, as the Chinese economy is the 2nd largest globally and GDP data measures economic output.

The figure released is 6.4% year on year in the forth quarter, and this was expected. The headlines will centre on the annual figure which is now officially 6.6% through 2018 which is the lowest figure on record since 1990, almost 30 years ago.

Now that the annual GDP figure has been released the concerns surrounding a slowing Chinese economy have been confirmed, and this could spell trouble for the global economy with economies such as Australia’s likely to feel the pinch considering the extent to which the Australian and Chinese economies are intertwined. The negative effects of the US-China trade war can now been seen so hopes of a deal being stuck will be a high as ever, and it’s likely that the talks could impact AUD exchange rates as AUD could react to US-China sentiments.

From the UK side, this afternoon could offer GBP exchange rates some direction as UK Prime Minister, Theresa May will announce the governments Plan B now that her deal hasn’t made its way through parliament. The pound has dropped off slightly at the beginning of this week which is likely due to the anticipation of what will be said later. For now, cross party discussions have come to a halt as the leader of the opposition, Jeremy Corbyn has stated that we won’t talk until a no-deal is ruled out.

I think that this afternoon’s announcement is likely to drive GBP exchange rates to begin with and that the Irish backstop will be a major talking point regarding the new plan.

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.

Sterling climbs as May’s Brexit deal is emphatically rejected

It’s been a volatile 24-hours for the GBP/AUD exchange rate, as the Brexit talks ramp up and the UK parliament decides how best in carry out the Brexit.

Late yesterday evening the UK Prime Minister, Theresa May’s Brexit deal was overwhelmingly voted against by Parliament. The amount of votes she lost by was in the top-end of expectations, as she lost by 230 votes with was a much larger number than many analysts had expected.

Since then, the leader of the opposition (Jeremy Corbyn of Labour) has called a ‘vote of no-confidence’ in the government which will take place this evening. May is expected to win as no members of her own government have announced that they will vote against her and the DUP Party of Northern Ireland has also offered their support.

Tonight’s vote at 7pm is the next step in the Brexit process that could impact the Pound’s value, but what happens next is now quite unclear. The existing government has 3-days to announce their plan-b which could also be a market mover, so if you wish to be updated in the event of a major market movement do feel free to register your interest.

The Aussie Dollar, like the stock markets in the region remain under pressure whilst we wait for more clarity on global growth and trade war concerns between China and the US. The GBP has regained a lot of ground against AUD recently and last nights vote has helped. The pair are currently trading in the 1.79’s so it will be interesting to see whether the pair will manage to break through the psychological 1.80 level.

Moving forward I expect to see the pair continue to be driven by Brexit related updates, although early tomorrow morning there will be a number of releases from Australia concerning new home sales and inflation 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.

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

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

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

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

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

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

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

 

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.

GBP/AUD continues to trade towards the lower end of its recent ranges, where to next for the pair and what’s influencing it?

The Pound to Australian Dollar rate continues to trade in the mid 1.70’s just over 1.75, which is around the bottom of its current trend when you look at both a 3-month and a 6-month chart. There has been a steep decline in the Pound’s value from around the middle of October and much of this market movement can be attributed to Sterling weakness as the Brexit uncertainties ramp up with the Brexit date just around the corner now.

Yesterday it was announced that the ‘meaningful’ vote on UK Prime Minister Theresa May’s Brexit deal will take place. It has previously been outlined for last Tuesday but she postponed it the day before owing to fears that she would receive very little support for it. May has since won a vote of no-confidence although there were around of a 3rd of her Conservative Party MP’s that voted against her leadership which shows the discontent with her deal.

The Pound has also lost value against most other major currency pairs recently as time to agree on a deal is running out. There appears to be little scope for amendments to the deal which may be the Prime Ministers downfall as the Northern Irish backstop arrangement is the main sticking point for the deal and the reason for the DUP Party not supporting the deal which has added pressure to May and also the Pound’s value.

Although economic data is not the main driver of GBP’s value at the moment, it’s worth being aware that this Thursday there will be a Bank of England Interest Rate decision and although no changes are expected, any comments to future monetary policy plans could influence the Pound’s value.

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 Australian dollar weaken in 2019?

2019 is looking like it could be a very testing year for the Australian dollar, with a number of possible outcomes on the currency. By and large, it is likely it will be overseas events which act as the bigget driver on the currency with the Trade wars between the US and the China looking a key factor to drive the currency. With 30% of Australian exports going to China, the economic outlook on China and global trade in general, is vital to determining how the Australian dollar will behave.

Throughout 2018 the market has been see-sawing on the prospect of the trade disputes deteriorating or improving. The overall expectation in 2019 is the trade tensions will only deepen as both the US and China dig their heels in, seeking to save face and ultimately harming their economies in the process. Donald Trump is looking like he will only continue to put pressure on China and the Chinese are unlikely to back down.

The recent extension of the 10% tariffs further into 2019 was seen as welcome, although the looming prospect of 25% tariffs on $200 bn worth of goods should be cause for concern. The market is eagerly awaiting the next steps and future direction of the trade disputes. Even with these short term ‘lulls’ in sentiment, the overall negative effects from this issue should be a thorn in the side of the Australian dollar in 2019.

The RBA, Reserve Bank of Australia, have been very aware of the trade concerns and this may well weigh on their decision making process in the coming year. The likelihood is that the RBA will not raise interest rates next year, as they have to allow the Australian economy the space it needs to continue growing, amidst the uncertainty of a slower Chinese economy.

There is even speculation the RBA might need to consider an interest rate cut, should the Australian economy really struggle. Clients holding Australian dollars to sell, might wish to take stock of the favourable levels on offer compared to how weak the currency might get next year.

Thank you for reading and please speak to me Jonathan Watson to learn more regarding the currency and the best strategy to maximise value.

jmw@currencies.co.uk

 

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.