Tag Archives: reserve bank of australia

Brexit Impact papers push Sterling lower against the Australian Dollar

After a strong start to the trading session yesterday, Sterling exchange rates have seen their fortunes reverse since yesterday afternoon when Brexit Impact papers were released by both the Government as well as the Bank of England.

Both releases suggested that the UK will be worse off by carrying out the Brexit with the BoE outlining a number of worse case scenarios for the UK economy in the case of a no-deal Brexit. Their report outlined the potential for the Pound to lose 25% of its value against both the Euro and the US Dollar which would put Sterling below parity vs both of these key currencies. Property market falls of 30% were also contained within this worst case scenario Brexit report as well as unemployment potentially rising to 7.5% and since this report we’ve seen a sell-off of the Pound’s value which has accelerated this morning.

After almost reaching 1.77 yesterday we’ve seen the pair drop below 1.75 this morning which goes to show how much the currency has been impacted by these reports. It’s also worth noting that the Australian Dollar has lost value recently owing to the sharp drop in the value of iron ore which is a key export of the Australia’s. Iron ore prices have dropped by 9% this week which represents the largest drop in over a year. The rhetoric between US President Donald Trump and Chinese leaders has also ramped up with concerns of a global slowdown owing to the trade war once again impacting currencies such as AUD’s.

Economic data releases are light for the remainder of the week between the UK and Australia so it’s likely that Brexit talks will remain the main driver of currency fluctuations.

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 comes under pressure as US-China tensions resurface, and fears of a global slowdown take hold

The Australian Dollar has come under pressure in early trading today, although the fall has a lot further to go to wipe out the gains made by AUD over the past month and a half. Against the US Dollar the currency has lost over 1% over the past 24-hours as investors have piled into safe haven currencies and taken funds out of riskier currencies such as the Aussie.

Over in the US the Federal Reserve Bank has indicated plans for a less aggressive monetary policy next year than the markets had previously anticipated, and signs of a global slowdown with stock markets still selling off is concerning financial markets hence the sell-off.

AUD exchange rates haven’t been helped by comments out of the White House yesterday either. In the lead up to the G20 meeting next week there have been hopes of a truce between US President Donald Trump, and Chinese President Xi Jinping, but yesterday as the White House said Beijing has failed to alter its ‘unfair’ practices. As China is such a key trading partner of Australia’s this is negative news for AUD which perhaps explains yesterday’s sell-off of the Aussie Dollar.

There are no economic data releases out of Australia this week, so I expect the GBP/AUD rate to continue to be driven by Brexit related updates which are coming through thick and fast at the moment. UK PM, Theresa May will be in Brussels today to discuss the Brexit agreement text with EU leaders for the first time since the text was announced last week.

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.

 

RBA Statement boosts the AUD: Where next for the Australian dollar?

The Aussie rises…

The Australian dollar is stronger overnight following an upbeat assessment from the RBA Monetary Policy Statement. The Reserve Bank of Australia is loosely looking to raise interest rates in the future which would help the AUD to rise. It has risen overnight following the commentary that saw them raise their Inflation and Growth forecasts.

Another factor to drive the Australian dollar is the outlook on the Trade Wars which have seen the Australian dollar rising according to the viewpoint on how it will influence the Chinese economy. Recent rising expectations that the Trade Wars would gently resolve themselves have cooled but the initial fears that saw the Aussie massively sold off, have subsided.

Global Issues remain

I expect the Trade Wars will continue to provide concern, it seems more likely than not that Donald Trump will trigger some kind of concern on global financial markets which would weaken the Australian dollar. If not owing to economic concerns abroad, it might be political concerns domestically in the US which drive the Aussie.

The recent mid-term elections saw the US dollar lose ground against most currencies with the Australian dollar a beneficiary of the uncertainty. The Aussie did rise on this news, as investors sought to diversify their currency exposure away from the US and possible political issues ahead.

As you can see, there are numerous global factors which drive the Australian. Trying to accurately predict what the rates will be will involve accurately predicting not only what Donald Trump might do, but also how the market might react to it. Some might suggest Donald Trump does not know exactly what he will do next, trying to predict him will be no easy feat!

What lies ahead for GBPAUD rates?

GBPAUD levels have fallen below 1.80 on the news, could the RBA be preparing to raise interest rates? Westpac do not think so, with them believing the RBA will hold through 2019 and 2020. There is even a view that the RBA may cut rates, by some who feel Australia’s booming housing market and highly indebted consumers cannot stand a hike.

Whilst the pound has been notably buoyant across most currencies, rising to some of the best rates all year or certainly multi-week or month highs, the pound to Australian dollar rate has not performed so well. Whilst we are tracking improved levels, we are still down owing to the Australian dollar also performing well.

GBPAUD exchange rates hit a peak of 1.8713 in October of this year, significantly above the 1.5909 lows of Brexit in October 2016 following the EU Referendum. Current rates of 1.79-1.80 are therefore below the peak but above the average.

Mix into this the uncertainty on Brexit (who can accurately predict the outcome there either?) and we have a plethora of events to move GBPAUD rates. My general expectation is that the pound will rise further against a weaker AUD if the global concerns continue on Trade Wars. I think the threat of a ‘new world order’ of more protectionism will see the Australian dollar weaker in the future, particularly as that uncertainty will keep the RBA on hold or possibly looking to cut.

Will you need to make a transfer?

For clients with a position selling Australian dollars for pounds, I feel gearing up to capitalise on the recent spike is sensible. Clients buying AUD with sterling might wish to take a slightly more speculative view but in hoping for further improvements, they could easily get caught out relying on a smooth Brexit process.

If you have a position to buy or sell AUD for sterling I would be most interested to share some of the latest news and events driving this pair. There is no easy answer to the question of ‘when is the best time buy or sell Australian dollars?’, but by careful analysis and utilising our experience in tracking trends, we do strive to offer an informed opinion to help you make the most of your currency needs.

Thank you for reading and please contact me to discuss further.

Jonathan Watson

jmw@currencies.co.uk

 

Weaker AUD beneficial for the Australian economy, where next?

The recent RBA, Reserve Bank of Australia Minutes showed us that the RBA view the recent weaker Australian dollar as good news for the economy in helping to support growth. Australia’s economy is heavily reliant on the sale of its raw materials globally, including to China, its major trading partner. The expectation here is that the RBA will not be in any rush to raise interest rates, they view the weaker currency as ‘good news’.

The big news for this week on the Australian dollar is Unemployment data released in the early hours of tomorrow, at 12.30 GMT. The figures are predicted to show the Unemployment rate holding steady but a lower participation rate and possibly a lower employment rate. This could see the Australian dollar weaker as it underscores the recent direction and sentiment that has weakened the currency.

This could mean the Australian dollar continues to drift lower and remain weak, particularly owing to other factors including the likelihood of Trade War issues continuing to weigh on China, its largest trading partners. Markets are concerned that the Chinese economy is struggling as a result of the trade disputes with the US and Donald Trump, this has seen some economic indicators in China reach concerning levels.

China is struggling with a slowing rate of growth and concerns over home sales, rising Inflation and also falling car sales. Other examples of anxiety include the amount of debt taken on by Chinese authorities in their pursuit of infrastructure to build their economy. All of this is painting a slightly worrying picture for the Chinese economy as the trade wars are likely to get worse and this will all put pressure on the Aussie dollar too.

If you have a transfer involving the Australian dollar into any other currency and wish for some expert insight into the trends and themes to move the market, why not get in touch with us. We are a firm of specialist FX brokers with many year’s experience in managing large volume international payments.

Thank you for reading and we hope to hear from you soon.

Jonathan Watson

jmw@currencies.co.uk

Selling falls against the Australian Dollar after chances of a No-Brexit deal increase

The Pound to Australian Dollar rate has fallen below the key 1.80 mark during today’s trading session. This is key as the GBP/AUD pair had previously consolidated above this level and traded as high as 1.85 before the recent fall which has taken place because of the Brexit related comments this week.

At the time of writing the EU leaders are all currently in Austria, as they have been for the past couple of days as there is an informal summit taking place. Whilst there have been some positive comments regarding Brexit recently the summit has all together been a negative for the Pound as the currency has fallen dramatically against a range of currency pairs, with the fall against AUD being quite dramatic in terms of recent price movement which has mostly been thin.

Much of the talk revolves around the Chequers deal, and whether or not it will be both the preferred approach of the UK government and also accepted by the EU members, which at the moment is looking unlikely especially after a speech by UK Prime Minister, Theresa May today.

There is a bank holiday down under on Monday of next week, as it’s the Queen’s birthday and there aren’t any major releases until next Friday which means I’m expecting the Pound to be the main driver of currency fluctuation between the GBP/AUD pair.

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.

What can we expect this week for GBPAUD exchange rates?

The week ahead for the Australian dollar looks set to be dominated by continuing news on the likelihood of future interest rate hikes down under. Last week saw a mixed bag of data as investors weighed up the conflicting signals and the overall outlook on the currency pairing. This was underscored by a very positive unemployment report which helped the Aussie to rise against its counterparts. Good news on the Australian dollar has however been tempered by the worrying prospect of fresh economic tariffs from Trump on China, Australia’s main trading partner.

The main economic news this week will be the RBA, Reserve Bank of Australia Meeting Minutes and also the House Price Index released this evening. Later in the week we will also see the the RBA Bulletin and also a speech by Assistant Governor Christopher Kent. It was a speech by RBA Assistant Governor Bullock last week which saw movement on the rates as he highlighted growing household debt.

Clients with a currency transfer involving the Australian dollar could now face a range of events to move the rates, it does appear the factors which have weakened the Aussie in recent weeks, are set to remain. Global concerns over Trade Wars which are set to negatively impact China will weigh on economic sentiment and this will influence the Australian dollar.

If you have a transfer to consider buying Australian dollars with pounds there is also the EU Summit which is coming up which could see a volatile week on GBPAUD exchanges. Brexit continues to be the main driver on the pound and this information could see some volatility on the pair.

If you have a transfer to make involving the Australian dollar, we are in business to offer assistance with the timing and the planning of any currency transfers. For more information at no obligation please speak to me Jonathan Watson by emailing jmw@currencies.co.uk.

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

Jonathan

Will the Australian dollar rise or fall in September?

The Australian dollar is likely to come under increasing pressure in my opinion, as we approach a series of important domestic events in Australia and also some global issues which might driver its value. At home, concerns over the political outlook from a fractured government combine with concerns about the economy. Abroad the Trade Wars between Trump and China puts pressure on the Chinese economy, Australia’s biggest trading partner.

The Australian dollar has typically attracted investment from abroad owing to its high interest rates, a currency’s value can often be determined by the yield or return available to investors. Expectations for the Australian dollar are now lower with the US raising interest rates to a level now higher than Australia. Even the UK and Eurozone, both scarred by political and economic uncertainties in recent years, are on a path to raise interest rates.

This puts the Australian dollar on the back foot and means it cannot perform as well as it has done in recent years. Australian interest rates reached a peak of 4.75% but are now currently 1.75%. This has generally made the Australian dollar a less attractive currency to hold and I believe this will continue.

Some of the fundamental factors driving the currency markets are good indicators of future performance. The fundamentals on interest rates suggest that Australia will not be raising before either the UK, possibly the Eurozone and certainly not before the US. This will mean these currencies become more attractive to hold and might gain against the Aussie.

Political concerns in Australia have not diminished in Australia and these could see further weakness for the currency in the future. Wider global concerns could also be felt by the escalation of tensions from the Trade Wars in China, there is plenty to weaken the Aussie down the line.

If you have a transfer buying or selling Australian dollars then please do not hesitate to contact me Jonathan Watson to discuss further.

Jonathan Watson

jmw@currencies.co.uk

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

Pound makes gains vs the Australian Dollar after Turkish issue and UK inflation data due out (Tom Holian)

The Pound has made some gains vs the Australian Dollar over the last few days and the move appeared to happen following the news in Turkey that Donald Trump has imposed an addition to tariffs on both steel and aluminium on Turkey and this started to cause huge problems in the country.

The Turkish Lira has dramatically weakened in value over the last few days and this has caused a number of commodity based currencies to weaken as global investors have sold off riskier based currencies including the Australian Dollar.

After briefly flirting with rates in the 1.73 levels recently the Pound vs the Australian Dollar is now back to trading above 1.76.

Meanwhile, the Reserve Bank of Australia confirmed recently that it will be keeping interest rates on hold while it waits for economic growth to improve and this has also helped the Pound to make gains vs the Australian Dollar and the Australian Dollar is now at its lowest level vs the US Dollar in two years.

The RBA does not appear to be too concerned with the value of the Australian Dollar and because it is a big export market if the AUD continues to weaken then this could help to improve economic growth in Australia.

The UK and the Pound has had a good start to the week against a number of different currencies with the news that UK unemployment is close to its lowest levels since 1975 with the figure now sitting at 4%.

We could be in for further movement later this morning with the release of UK inflation data due to be published at 930am.

Inflation has been a big factor in the Bank of England’s recent decision to increase interest rates and with the data expected to show 2.5% year on year which is above the 2% target then this could provide further evidence in support of further rate hikes in the UK which could help to move GBPAUD exchange rates in an upwards direction.

If you would like a free quote or further information about how to save money compared to using your own bank when converting Australian Dollars then contact me directly and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk 

 

 

Australian Dollar continues to lose value as inflation levels stall

The financial markets don’t expect to see the base rate of interest change down under until the end of next year according to futures markets, and this is perhaps one of the reasons behind the Aussie Dollars weakening currently.

If the Reserve Bank of Australia (RBA) doesn’t amend rates the AUD will lose competitiveness as we’ve already seen, as the likelihood of investors holding assets in the currency diminishes owing to the less competitive of the currency. The US Dollar on the other hand has benefited greatly from its more aggressive monetary policy and the greenback has strengthened by such an extent that US President, Donald Trump has voiced his concerns.

The latest bout of Inflation data out of Australia shows that inflation has risen by 2.1% over the past year, which is slightly lower than what economists were expecting. There doesn’t appear to be much momentum regarding Australian inflation levels which is perhaps the reason behind the low expectations of a rate hike in the short-term future.

Although the Pound has been under pressure in recent months owing to the Brexit plan uncertainty, the Pound to Aussie Dollar rate is still towards the top end of it’s longer term trend, which demonstrates the pressure AUD exchange rates have come under. The GBP/AUD pair is likely to be driven by both monetary policy and UK based politics as the UK is going through a crucial time due to the Brexit.

Those monitoring the Aussie Dollars value should also pay attention to US President, Donald Trumps trade tariff’s plans as AUD has come under pressure owing to these concerns. With the Australian economy being reliant on global demand a slowdown to the global economy is likely to have a negative impact the Australian Dollars 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.