The Australian Dollar is driven by a number of factors as regular readers will be aware of; China, US, Australia and the UK. China who is their biggest trading partner has an impact on the demand and therefore the strength of their economy. The US has an impact on risk appetite and Carry Trades, and thereafter the economic situation for the “home” currencies will of cause have an impact too. This makes the currency pair very difficult to forecast and means being patient and ready to move quickly is always the best way to get the best price.
The next potential opportunity comes at the end of this week and is driven by the “Carry Trade” activity on the currency pair. This is due to it being the end of the month and as a result is when the city traders globally need to sell off positions to recognise profit and hit their targets. This change in demand for the AUD will have an impact on its cost to both buy and sell. To go into the inner workings of this, investments are made into the stock markets and other areas within Australia. Over the month the value of this investment will have gone up or down, if it has gone up the profit is taken and the AUD is sold making it cheaper to buy. If the investment has fallen in value more money needs to be sent over to “reset” the investment creating demand for the AUD and making it more expensive to buy. So in summary depending on how their stock markets have performed can give an indication on which direction the money will flow and therefore which direction the currency market will move.
This month the markets have gone up so the expectation is that money will flow out of the AUD and therefore create AUD buyers with an opportunity. Be aware however that this expectation is well known and it is therefore attractive to day traders to trade against it which again could artificially move the markets.
All this will probably have an impact over the next 72 hours and again being alert and ready to move puts you in the strongest position to get the best price. Here we offer a pro-active service helping our clients get the best price. So if you are looking for assistance over the next few days or longer term feel free to get in contact with the author – Steve Eakins – via email at [email protected] or on the phone using the number at the top of the page.
On-top of the pro-active service we offer our exchange rates are also award winning, meaning you can trade in the comfort that you are saving money compared to your current provider; both bank or broker.
To compare you current prices, utilise our service, discuss your situation or for feedback please contact the author – Steve Eakins – via email at [email protected] or using the international number at the top of this page.