Westpac consumer confidence figures released yesterday were weaker than expectations which saw the recent AUD strength being stopped in its tracks. This has highlighted the problem that the economy is seeing signs of a slowdown and could cause some instability for the exchange rate over the next few months. With the growth in the mining sector slowing and worries over the job market down under this could be seen as negative for the Australian Dollar.
However, whenever buying or selling currency it is important to look at the pair and not one currency in isolation. Prime Minister David Cameron will be talking shortly after the general state of the UK economy and with Mervyn King having announced recently that monetary policy is not necessarily the answer to the problems that Britain is facing all eyes will be on the party conference later today.
If we move over to China’s economy which has been a key driver of the Australian Dollar strength in recent years China has announced that they will look to take more decisive action when it comes to their monetary policy in order to remain competitive and to encourage growth which has slowed marginally to 7.6% recently. If China does attempt to stimulate its economy by cutting interest rates and further cash injections this again could keep the Australian Dollar strong compared to Sterling.
For further information including up to date information on Cameron’s speech email me directly Tom Holian [email protected]