Tag Archives: RBA

AUD Forecast – RBA Keep Interest Rates on Hold at Record lows as GBP Finds Support Overnight (Matthew Vassallo)

GBP/AUD rates have spiked back above 1.84 overnight, as the Pound continued its recovery following last week’s losses.

Sterling was under considerable pressure following UK Prime Minister Theresa May’s failure, to once again get Parliamentary approval for her Brexit deal. This was the third time she has failed to gain the necessary support from MP’s and investors reacted to this by selling off their GBP positions, causing a sharp dip in value for the Pound.

This downturn inadvertently boosted the value of the AUD, which has had its own problems recently. The AUD saw its value increase by over four cents against the Pound, hitting 1.8290 at the high.

At this stage it seemed as though GBP/AUD exchange rates could be heading back towards 1.80, with the markets seemingly losing faith in the UK’s ability to find some common ground over Brexit, with MP’s unable to agree upon the best way forward in regards to a Brexit deal with the EU.

With further twists likely in this ongoing saga, those clients holding GBP may look at this week’s upturn as an opportunity, with the uncertainty over the UK’s final Brexit position likely to hamper any significant upturns for Sterling.

Looking at the Australian economy and the Reserve Bank of Australia (RBA) met last night and as anticipated kept interest rate son hold at the current record lows of 1.5%.

Like other commodity based currencies, the AUD has struggled to impose itself of late, with a slowdown in global trade causing investors to shy away from riskier assets such as the AUD. With the Chinese economy also showing signs of a longer-term slowdown, due for the most part to the on-going trade stand-off with the US, the outlook for the Australian economy remains dovish.

If you have an upcoming GBP or AUD currency transfer to make, you can contact me directly on 01494 787 478. We can help guide you through this turbulent market and as a company we have over nineteen years’ experience, in helping our clients achieve the very best exchange rates on any given market.

Our award winning rates can be accessed very easily over the phone and I can keep you posted with key market developments ahead of any prospective exchange you need to make.

Feel free to email me directly on mtv@currencies.co.uk to find out all the options available to you ahead of your currency transfer.

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.

AUD Forecast – Despite Brexit Uncertainty the AUD Remains Under Pressure (Matthew Vassallo)

The AUD has come under increasing pressure over recent weeks, with the Pound now trading around 1.87.

GBP has regained approximately 5 cents in the past few weeks, which is the equivalent of an additional 5000 AUD on 100k GBP/AUD currency exchange.

The Pound has made these inroads despite the on-going uncertainty surrounding Brexit. With the UK’s current exit deadline fast approaching, we still do not have any clarity on what the final outcome will be and this in itself you could argue, should be restricting any major improvement for GBP.

It seems as though the markets have spiked on the back of Parliaments decision last week, to move away from a no-deal Brexit outcome. However, unless UK Prime Minster Theresa May can convince MP’s to vote on her Brexit deal at the third time of asking, then an extension to Article 50 looks like the only remaining option.

How long any prospective extension might be is now what the markets will likely focus on and any further improvements for the Pound, will likely be impacted by this decision. With rumours of a two-year extension being floated, how will investors and the public react to such a scenario?

If an extension is granted without any indication of an agreement being virtually in place, then investor confidence could take a hit. It is likely to be followed my major public unrest, with people seemingly losing patience with the on-going saga.

Looking at the Australian economy and with concerns over falling house prices and a slowdown in global trade, investors seem to be shying away from the once popular AUD.

Add this to concerns that the Reserve Bank of Australia (RBA) will look to cut interest rates possibly twice this year and it is easier to understand why the Pound has made inroads against the AUD of late, despite investors remaining cautious about the Pound and its future prospects.

If you have an upcoming AUD currency transfer to make, you can contact me directly on 01494 787 478. We can help guide you through this turbulent market and as a company we have over nineteen years’ experience, in helping our clients achieve the very best exchange rates on any given market.

Our award winning rates can be accessed very easily over the phone and I can keep you posted with key market developments ahead of any prospective exchange you need to make.

Feel free to email me directly on mtv@currencies.co.uk to find out all the options available to you ahead of your currency transfer.

 

RBA expected to keep rates on hold, but could GBP/AUD see further gains this week?

Over the past week we’ve seen the GBP/AUD rate hit the headlines after the rate hit an almost 3-year high. With Brexit now just a few weeks away the Pound has defied many expectations and strengthened across the board of major currency pairs with GBP/AUD hitting 1.8732 at its highest point. At the time of writing the pair remain north of 1.87 on another strong start for the Pound so I wouldn’t be surprised to see the current 52-week high of 1.8732 tested again, if not today perhaps later this week.

Sterling has been climbing since the path for Brexit became clearer, and a number of MP’s have suggested they could support the Prime Ministers Brexit deal when the next vote takes place. The next meaningful vote will take place on the 12th of this month and after Theresa May lost the last key vote on this matter by a record margin I expect all eyes to be watching the Pound and the outcome of the vote on the 12th.

This evening UK time the Reserve Bank of Australia (RBA) will announce their next interest rate decision. No changes are expected from the record low of 1.5% but the comments afterwards from the RBA could impact AUD exchange rates so it’s worth being aware of this release as the last time the RBA made some dovish comments and indicated that there could be further cuts we saw the Aussie Dollar sold off.

I expect political updates from the UK especially regarding Brexit to remain the main drivers of currency fluctuations owing to the Brexit being just a few weeks away now.

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 remains strong against the Australian Dollar even after poor UK GDP figures

The Australian Dollar has continued to struggle against the Pound hitting 1.82 during today’s trading session creating some good opportunities for anyone looking to convert Pounds to Euros at the moment.

The Reserve Bank of Australia was relatively dovish during its recent press conference and accompanying statement and it appears as though the next rate change for the central bank down under could be a rate cut in the future.

One of the reasons why the RBA has yet to make a change to interest rates is owing to the recent higher than expected inflation data, which although lower than the 2-3% target has been rising recently.

Typically if inflation rises then the usual strategy to combat this would be to increase interest rates but as the property market in Australia is showing real signs of slowing down then an interest rate rise down under could cause big problems for the Australian housing market and could send home owners in to negative equity.

According to many sources an interest rate cut before the end of 2019 now seems like a certainty and this is part of the reason why the Pound continues to remain relatively strong against the Australian Dollar.

Whilst the Trade Wars between the US and China continue to rumble on then global investment appears to be bypassing the Australian Dollar in favour of the US Dollar and this is another reason for the continued weakness of the AUD vs the Pound.

Earlier on today UK GDP showed a slowdown for the final quarter of 2018 combined with some lower than expected Industrial and Manufacturing Production data but this did little to negatively impact Sterling as the market appears to be waiting to see how the Brexit talks will progress during the course of this week.

I have worked for one of the UK’s leading currency brokers since 2003 and I’m confident that not only can I help you save money on exchange rates compared to using your own bank but also help you with the timing of your currency transfer. For a free quote then contact me directly via email with a brief description of your currency requirement and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

 

Australian Dollar weakens after RBA comments and how will the Irish backstop issue impact the Pound and the Australian Dollar

The Pound has been improving once again against the Australian Dollar and has moved by almost 4 cents during the course of this week.

The Australian Dollar weakened against the Pound after RBA Governor Philip Lowe’s comments that there was a chance that the Reserve Bank of Australia may be preparing for an interest rate cut later on during 2019.

Tomorrow morning the RBA will announce their latest Monetary Policy Statement, which will cover the issues and the reasons why the members voted as they did at the recent meeting.

The reason why this Statement could be key to the short term future of the GBPAUD exchange rate is because it will give us an insight as to what the appetite is of a future interest rate cut.

With the US Federal Reserve having increased interest rates by 9 times since the end of 2015 although they do not appear to be increasing interest rates at the same pace during this year, the risk for the Australian Dollar is that it does not offer the same yield of interest that is available in the impressive US economy at the moment.

If the RBA do decide to cut interest rates later this year then the likelihood is that this will cause the Australian Dollar to weaken in the future but there are many variable in between including the latest Brexit issues.

UK Prime Minister Theresa May is currently in discussions with European leaders to try and sort out the issue of the Irish backstop as the UK and the EU are currently at loggerheads as to how this scene will play out.

The Bank of England are also due to meet today to decide their latest monetary policy decision. Clearly at the moment there is little chance of any change to interest rates whilst we are just 7 weeks from when the UK is due to leave the European Union so it will be the accompanying press conference that will provide any clues as to what will happen to the Pound vs the Australian Dollar. Bank of England Governor has been rather cautious in his tone towards Brexit so any more of the same could see a small wobble for Sterling later on today.

If you would like a free quote when buying or selling Australian Dollars then contact me directly and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

 

Housing market a concern for Australia

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

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

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

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

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

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

 

 

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

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

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

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

 RBA meeting minutes tomorrow morning

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

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

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

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

 

Australian Dollar strength vs the Pound but is it just short term?

Despite some very positive gains for the Pound against a number of major currencies Sterling failed to make any real advances vs the Australian Dollar.

Weaker than expected Australian Retail Sales would have typically weakened the Australian Dollar vs the Pound but this was not the case.

The Australian Dollar could even continue its recent rally against the Pound as it appears as though US President Donald Trump is gearing up for talks with the Chinese President about stopping the current Trade Wars which has been taken as good news for commodity based currencies including the Australian Dollar.

As we head in to next week the Reserve Bank of Australia will be meeting to announce their latest interest rate decision and I fully expect interest rates to be kept on hold but it will be the comments made as to whether we’ll see any suggestion of a rate hike coming in the future.

The RBA are in a tricky position as house prices in both Melbourne and Sydney have been falling recently so any interest rate hike could cause more problems for the economy so I think the tone may be rather cautious and this could see the Australian Dollar shows signs of weakness against the Pound following the announcement made on Tuesday.

Clearly the Brexit remains the over-riding factor in determining what may happen for the Pound against the Australian Dollar and with claims made by Brexit Secretary Dominic Raab that a deal could be reached by 21st November if there is any truth behind this story could we see the Pound make gains vs the Australian Dollar later on this month?

If you have a currency requirement involving Australian Dollars and would like to save money on exchange rates compared to using your own bank then contact me directly for a free quote and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk

Could the Pound improve against the Australian Dollar after RBA minutes and EU Summit this week?

The Reserve Bank of Australia published their latest set of minutes which confirmed interest rates would be kept on hold for the time being which has led the Pound to hit 1.85 against the Australian Dollar overnight leading to some excellent opportunities to buy Australian Dollars with Pounds this week.

With property prices starting to fall in both Sydney and Melbourne the RBA’s tone was rather cautious. Indeed, property fell by 6% in Sydney and 4% in Melbourne, which have previously been the best two performing markets in recent years.

The central bank went on to warn the markets that the trade policies between the US and China could continue to cause potential negativity for the Australian economy but that as Australian growth is at 3% the economy is still relatively robust.

However, as house prices are falling and wages are not going up that quickly this is why interest rates in Australia are not likely to be going up anytime soon and predictions are that the next interest rate hike may not come until 2020.

Meanwhile, the Pound is being affected by what is happening with the latest Brexit discussions and with the EU summit due to start tomorrow and conclude on Thursday the main topic will be that of the Irish border issue which appears to be far from getting sorted.

Previously, the discussions were due to end by this particular meeting but with an emergency Brexit summit planned for next month we may not see the talks concluding positively this week so be prepared for a lot of volatility coming in the next few days if you’re planning a currency transfer involving the Pound vs the Australian Dollar.

If you have a currency transfer to make and would like to save money when converting Australian Dollars then contact me directly for a free quote and a brief description of your requirement and I look forward to hearing from you.

Tom holian teh@currencies.co.uk