As mentioned in our previous blogs earlier today the Reserve Bank of Australia (RBA) released the minutes from their last meeting when they lowered interest rates. These minutes were not expected to show a great deal however did through up a few surprises creating a SPIKE in the market. Buying AUD has today reached the highest level in nearly 3 years creating a great opportunity for people looking at buying the Australian Dollar.
Why has the market SPIKED?
In the minutes from the RBA the comment that has created this movement is – “Exchange rates will have an impact on policy change.” – This has been read as they suggesting they could cut interest rates again this year. The consensus before the report was that another cut was happening in the next 12 months but probably not before the New Year. This has now changed and suggest that a further cut could happen again in 2013. This weakened the dollar and gives us this great buying opportunity.
What is a SPIKE?
A Spike in the market is when the market moves quickly to price in new information. This normally is a much larger swing that is normally seen and gives people ready to trade more often than not the best exchange rate. Here we offer a service providing notification of the Spikes. If you would like to register for this please simply email your details including your timeframes, volumes and contact details to [email protected] – we will then contact you with the information so you can make an educated decision.
How long will it last?
This spike will probably only be around until this afternoon or tomorrow morning. At which point the day traders that have ridden this gain will probably sell off their position to recognise the profit made, this will change the demand for the dollar and probably result in it coming to a rest about a cent lower than its highest point
Is this the best price we will get?
My thoughts are that this morning’s price will probably be the best time to buy the Australian Dollar for the next 10 days, until the start of September. At which point with the election getting closer I expect the Australian Dollar to weaken again.
Should I wait until the election?
I think the election will have an impact on the Australian Dollar, in the run up to the vote I expect the Dollar to weaken by possibly a few cents. When the votes have been counted and a government ins in place I would however expect these loses to be re-taken and perhaps over taken. The only outcome which may create an even weaker Dollar is if there was no clear leader and no certainty; for example if a coalition government was a potential.
What is worth noting is that even though the election will probably weaken the Dollar, there is no guarantee it will provide a better price that where we are now. I would be inclined to take the gamble if I was buying AUD and had a few weeks but each person in that situation should come to their own decision on which strategy is best suited to them.
The Currency Market will never move in a straight line meaning opportunities like these do come up, if you would like our assistance with your currency transfer please feel free to get in contact – [email protected] We are happy to help and give you access to the award winning exchange rates we have on offer along with, Spike Notifications, Rate Alerts, Live prices, and many other tools.
Look forward to hearing from you,