Tag Archives: us dollar
In what has been one of the most volatile weeks in recent times for the Australian Dollar exchange rate we have seen the AUD weaken against the Pound towards the end of the week.
The currency pair has been affected by the ECB action taken on Thursday which initially helped to strengthen the AUD however a little later we saw a flight to safety by global investors who have ploughed into the US Dollar.
These same investors have sold the Aussie if favour of the USD which has led to the GBPAUD exchange rate going in an upwards direction.
Iron ore prices also saw a fall this week and as this is one of Australia’s largest commodities this also saw the currency weaken.
Indeed, in the Australian iron ore industry companies reported more than $3 billion in asset writedowns this week.
With the RBA set to meet on February 3rd if there is a rate cut we could see Sterling rise against the AUD but an absence could see a short term strengthening for the Aussie Dollar.
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This morning the Australian Dollar has hit its highest level against the pound and US dollar since November 2013. Levels have shifted overnight following an increased level in housing data and consumer confidence. A significant shift was also seen earlier in the week following the trade agreement made between Japan and Australia. In the agreement Japan has agreed to lower duties on Australian beef and raise the duty-free quota on cheese – Australia’s biggest dairy export to Japan. Australia will cut tariffs on Japanese electronics, cars and white goods. The deal, agreed after seven years of negotiations, is expected to be finalised later this year when Japan’s prime minister visits Australia.
With the recent shift in sentiment from the RBA and Glenn Stevens indicating he is more comfortable with the position of the Australian Dollar and the forecast of a housing and construction boom things are looking a lot brighter for the Aussie. Anyone buying the AUD may wish to re-evaluate their position, remember you are still over 20% up since June 2013 but the tide seems to have turned and the Aussie is certainly fighting back.
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GBP/AUD through 1.81 following poor GDP figures from Australia, will this trend continue? (Mike Vaughan)
Sterling pushed through the 1.81 barrier this morning, bringing GBP/AUD to its highest levels since February 2010 – but will this trend continue? Overnight Australian GDP data was released showing a disappointing result of 0.6% down from the expected 0.6%. This has brought the shift in Sterling to just shy of 8% against the Aussie since the end of October – a pretty good return in anyones eyes. For me there is a chance that this run will continue, but I would also urge AUD buyers to consider these gains and view the opportunities currently available.
Looking at the data for the rest of the week watch out for employment figures from the US at 12:15 today and the important non-farm payroll figures at 13:30 on Friday. Any improvement and I would expect further losses for the AUD as this shifts the likelihood of the FED tapering QE a little bit closer, a situation that is likely to bad news for AUD exchange rates. Also watch out for the Bank of England interest rate decision tomorrow at 12.00, expect to see no change which shouldn’t affect rates significantly but still one to keep an eye on.
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Sterling has rallied nearly 1% against the Australian Dollar. Overnight the Bank of Japan increased stimulus as it aims to double the monetary base over two years through the aggressive purchase of long-term bonds, in a dramatic shift aimed at ridding Japan of the deflation that has dogged the country for almost two decades. This is a bold move for the new central governor Haruhiko Kuroda and may shift investors risk apetite. As a result the JPY has devalued and with the Yen often heaviliy involved in currency speculators risk portfolio this may create significant shifts in currency trends over the coming days creating volatility for the safe haven currencies (historically USD and CHF) and many riskier assets such as the AUD, NZD, ZAR and EUR. Watch out for some big shifts over the next few working days, and possibly some unexpected opportunities for AUD buyers.
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It has been a turbulent week for GBP/AUD with high low rates ranging from 1.5375 to 1.5150 – but where now for the Aussie I hear you ask? The UK economy has taken a bit of a battering this week culminating in poor GDP estimates this afternoon suggesting the dreaded’triple dip recession’ could be on the cards. This is obviously not going to do any favours for the pound and for the time being will keep any gains against the AUD to the downside. Any short term buyers of the dollar may look to secure their position sooner rather than later.
Longer term I am still a strong believer that this year should be slightly more positive for GBP/AUD. I do feel however that any losses for the Aussie will be down to AUD weakness as opposed to GBP strength as early indicators from the UK suggest 2013 could be a rocky road to recovery. That in mind expect little change from GBP/AUD short term (there are some great opportunities for AUD sellers at the moment) however if you have the advantage of time then I feel the rates may tick back towards 1.55-60 territory later this year as I would expect the RBA to cut interest rates in Australia before the end of Q2 and feel the Australian economy may come under some pressure in the coming months due to falling demand in China. I also feel the US debt ceiling deadline in February may cause a sell off from the relatively risky AUD back to lower yielding currencies such as the Pound and USD, as a result I would hope to see some better opportunities for AUD buyers in February and beyond.
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The Reserve Bank of Australia are due to meet tomorrow to decide whether or not they’ll cut interest rates. My personal feeling is that there may be a cut to 3% in order to give the economy a lift. With a recent slowdown in China we have seen Australia’s economy struggle outside the mining industry and so a rate cut could give the boost needed. The US election is due to take place tomorrow night and I feel if Obama comes in we’ll see USD strength and if Romney comes in we could the US Dollar weaken. With USD strength it often goes hand in hand with the AUD so if Obama gets in we could see strengthening for the AUD even if the RBA cuts interest rates tomorrow.
For further up to date information and detailed analysis of what is happening in the currency markets after the US elections feel free to contact me directly. Tom Holian email@example.com
The Australian Dollar Forecast has taken a slight change in direction having reached the highest exchange rate since June 2012 following the European announcement of a €500bn Euro debt rescue fund. The fund is known as the European Stability Mechanism as is set up in order for countries to use if other bailout funds become unavailable. The European Financial Stability Fund still have €150bn available but that may run out before the end of the year if countries such as Spain need a bailout.
This has provided some stability within the region as has encouraged investors to again look at moving money into riskier currencies including the Australian Dollar which saw a drop of 1% during yesterday’s trading session. Columbus Day which was being celebrated in the US meant there was little movement for the US Dollar and therefore the news had a huge negative impact on the value of Sterling. This may be just a short term blip with some analysts believing we could be in for 1.60 on GBPAUD exchange rates before the end of the year if the RBA decides to cut interest rates again.
Later tonight UK time we see the release of the Westpac Consumer Confidence report which measures the level of sentiment of individuals and their feeling on the Australian economy.
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Sterling has remained strong against the Australian Dollar over the last few days and I think the next movement will be following the release of US Non-farm Payroll data due out at 130pm UK time. The recent interest rate cut and 3.5 year high of the country’s trade deficit has seen the AUD weaken to its lowest level in a few weeks.
Last night’s FOMC minutes (US data) didn’t throw up any surprises so again the currency markets are holding their breath in anticipation of the next move. Indeed, the general consensus is that US interest rates will stay the same until 2015. The predictions for the non-farm payroll data this afternoon is for a creation of 113,000 new jobs so if we see an improvement we could see a sharp sell off from Australian Dollars as funds flow back into the safe haven of the US Dollar. If however we see less jobs we could see the GBPAUD exchange rate drop from its recent highs.
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Coming this weekend there is a possibility that we might see a bailout for Spain which could lead to stability for the Euro zone and more risk appetite developing for the Australian Dollar. For up to date information contact me directly Tom Holian firstname.lastname@example.org
Australian Inflation Data Due Out In Just Over 8 Hours So How Will This Affect Aussie Exchange Rates?
The Aussie Consumer Inflation Expectation data is published overnight tonight and may see some substantial Aussie movement depending on the outcome. The previous figure was 3.3% and expectations are for something similar- however a sharp variation from this level could see a substantive move in Aussie Dollar exchange rates. The higher the consumer expectations, then the more likely the RBA are to hike interest rates, which will see AUD strengthen. However a very low figure may start calls for an interest rate cut which would have the revers effect.
The Aussie has strengthened against the pound and the US Dollar up until this week where it has softened slightly. Earlier in the year the RBA cut interest rates amidst fears over a slow down in Chinese demand and problems in Europe. In recent weeks Chinese data has been a bit more positive and the RBA have resisted the temptation for any further cuts with none expected imminently based on their recent policy statements. This has resulted in the Aussie retaining its strength and pushing back to the near 30 year high against the pound. The inflation data tonight will give more clues as to whether currency traders need to be wary of the hint of a rate cut being put back on the agenda- if you need to buy Aussie dollars then keep an eye out just in case.
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