The Reserve Bank of Australia kept interest rates on hold yesterday which has provided the AUD with some strength and seen GBPAUD exchange rates fall to 1.53 in mid-market. There was a chance the RBA could cut rates but keeping them on hold has seen the currency benefit. The RBA commented that an inflation rise during the previous quarter was one of the main factors in the decision process. China which is Australia’s largest export market has taken 27.1% of Australia’s merchandise exports in the previous quarter compared to 27.7% compared to this time twelve months ago. Mineral and coal exports were also down 22.1% and 22.3% respectively over the year. it could be argued that a slowing down of the Chinese economy could result in a weaker AUD but these figures are still extremely strong and whilst the rest of the western economies are struggling we could see the AUD remain in this range for the short term.
With Obama being re-elected for a second term this has provided the currency markets with some stability as the policies are likely to remain the same. This could also be another reason why we have seen the AUD strengthen as it creates more of an appetite for investors putting money into the Australian Dollar. If you would like to know more about the impact of the US election and Obama’s new term please do not hesitate to contact me directly. Email me Tom Holian firstname.lastname@example.org