Following the RBA minutes in which the central bank hinted at future rates cuts but gave no clue as to when, the Aussie has strengthened to a near four month high against the pound. Is this a window of opportunity for AUD sellers? In my opinion yes. For me of you look at the longer term factors then these still to me point towards AUD weakness. Lets take a look at the arguments:
– RBA will continue their stance on monetary policy – unlikely to happen for the remainder or 2013 but I would expect them to look at cutting rates in early 2014
– US to taper? With the US government on shutdown data sets such as non-farm payrolls have not been released. For me once an agreement is made and focus heads back towards unemployment and expanding the US economy, should data sets improve then this could lend support to the argument the FED should taper QE. For me once they do taper the Aussie will weaken. With less money in circulation, investment in higher yielding currencies is likely to fall and so to demand, therefore currencies such as the AUD could lose value.
– China – with the IMF forecasting output in China to slow in 2014 this could hamper demand for Australian raw materials, directly impacting its economy and currency.
– RBA still keen on a weaker dollar. With Australian exports outside of mining having taken a big hit in recent years, the RBA may wish to keep track of AUD strength to help its slowing economy.
For me the current shift of just over 4% in the past three weeks represents a good opportunity for anyone selling Australian Dollars. For those buying, the current trend is a concern but if you can bide your time (3-6 months) then I think you will see more value for your pound, having said that with the average trade price at approx. 1.56 this year and the market at 1.67 – this still keeps you well ahead of the game.
Should you have an upcoming exchange to arrange and you would like to discuss the current market and the currency service we provide then please contact the office on 01494 787478 or email Mike at [email protected]