Australian Dollar Forecast – Gaining strength back against Sterling on a daily basis again? What is happening and why?

Increase in Risk Appetite Helps Support the Australian Dollar

Many of my regular clients have been in touch lately asking just what I feel may happen next with the Australian Dollar and in truth the outlook for those looking to buy Australian Dollars isn’t looking too great again for the short term. Personally I feel we will see rates get better for AUD buyers further down the line as I feel there is a lot more still to come from the problems in Europe however for the time being they may have managed to bat things off for a little while.

If the Greeks manage to agree a Coalition then I would expect the AUD to strengthen further over the course of this week, and this has already been the case so far thanks to the RBA (Reserve Bank of Australia) meeting minutes suggesting it was extremely close to not cutting rates in Australia last time out and this suggests we may not see another cut as soon as we had initially thought.

Intrerest rate cuts are usually seen as negative for the currency concerned and a hike in rates seen as positive, so the fact they may hold off may lead to the AUD gaining back some strength in the short term unless we here comments in the near future that suggest otherwise.

Personally my thoughts on the European crisis are that it is so deep that it will just keep coming back, and every time it does come back we will see the AUD weaken as it is seen as a riskier currency and in times of global crisis investors tend to shy away from the riskier currenciesand they can tend to weaken rather rapidly.

If you have an upcomnig transaction to carry out involving the Australian Dollar, Sterling or any other major currency and want better exchange rates than you are currently receiving from your current broker or bank email me on djw@currencies.co.uk quoting ADF in your subject header.