Australian dollar should remain well supported due to poor US data

AUDGBP Lower as Retail Sales Slump Down Under

To be honest I am also boring myself to death banging on about the US and Quantitative Easing but it is such an important factor, if you are making or considering transfers involving the Aussie.

One of the many reasons for AUD weakness in the middle of 2013 has been the fears the US would stop QE. This is important because the constant flow of QE ($85 bn worth every month) by the US Federal Reserve is preserving stock markets, commodities and riskier assets (like the AUD)  as solid investments. As long as QE is continuing investors will be confident of the global recovery. The prospect of ‘tapering’ earlier this year knocked confidence and hence caused the AUD to weaken.

Fast forward to recent events and the US shutdown has pushed back the chance of any Fed tapering until early next year at the earliest. This is just my opinion of course but I think you would struggle to find anyone now who seriously expects the Fed to taper in 2013. Quite simply they do not have enough data to make an informed decision and September’s decision making process showed us they will be erring on the side of caution in making that decision.

Today’s jobs report from the US was disappointing and it was old news reflecting September’s economic activity. If this was bad we can only imagine October figures will be bad too since this will contain the effects of the slowdown.

All in all the lack of QE tapering means the AUD should remain well supported in the short to medium term. This probably puts to bed immediate expectations of say 1.80 on GBPAUD and 1.50 on EURAUD.

If you are weighing up any AUD transfers an awareness of everything that can impact your rate is key to making the right decisions. For more information please contact me Jonathan on [email protected]

I would be interested to hear about your position and help try to save you money.