Following a tremendous run of strength there is a good possibility that we will see an interest rate cut in Australia overnight. The likely effect of this is Aussie weakness as investors look for other havens. I don’t expect we will see any movement that is too dramatic as this is the expected outcome.
The big problem will be if there is no cut. The Aussie could then strengthen as any investors who had moved funds away because of this move them back to capitalise. The decision will be released 03.30 UK time so anyone located in the UK concerned about these movements should look to put something in place to ensure they don’t get caught out if things go in the wrong direction.
I predict AUD weakenss in the next 24 hours, before we see it firm up towards the end of the week, particularly against a weakening pound.
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