Australian Dollar Strength this week as Eurozone union agreed

AUD GBP Lower Ahead of PMI Data for the UK Economy

Stability has returned to the currency markets once again as the Euro zone leaders have seemingly agreed a path to take for financial stability. The deal includes making the ECB the heda of regulation for European banks. Spain is the next in line for a possible bailout as unemployment keeps rising across the country and debts continue to pile up. Instead of governments taking the responsibility for the debts which causes problems directly for their owqn taxpayers and their own economies having a separate body in control is arguably a lot easiert to manage.

The impact for the exchange rate for Australian Dollars means that investors will again be attracted to more riskier assets/currencies including the Australian Dollar so we could see the GBPAUD exchange rate head towards 1.51 in the early part of this week.

The Reserve Bank of Australia minutes take place on 17th December and it is likely that there may be hints of further rate cuts during 2013 as the Australian economy continues to contract. If this is the case we could see a small weakening of the AUD exchange rate.

I always encourage my readers to let me know their thoughts on the movement of the Australian Dollar exchange rate so feel free to email me directly with your predictions Tom Holian [email protected]