Aussie Dollar Faces Regional Pressure And The Fed Taper

AUDGBP Forecast: Will the Pound Break Past 1.84 Once Again?

The Aussie Dollar has faced a lot of headwinds in recent months, both domestically and overseas.  The next few days are likely to be hugely important for a number of factors so here are a few to keep an eye on:

US Fed Decision Tonight

The Fed have their latest meeting tonight and there will likely be another small bout of tapering by the powers that be in the US.  However should the taper continue at a faster pace than expected, it will put further pressure on the Aussie and other high yield currencies.  Whilst I do not see the increase in pace as being very likely, there is always the risk of the US GDP data out tomorrow.  A strong showing there may convince markets that the Fed will start moving faster in the near future, so if you are selling Aussie, you may want to keep fingers crossed that the US tap stays switched on for now.  US jobs data in a little over a week could be another major trigger point here.

 

Regional Pressures From NZ, China, and Japan

We also see the RBNZ decsion overnight, and whilst it may be too soon for them to do anything, rumours have been growing of the need for them to increase interest rates in the land of the long white cloud (although they will need to be careful that they do not cripple the economy by seeing the Kiwi strengthen).  Meanwhile in Japan they have held off any further easing at their last meeting as the economy seems to be battling deflation effectively.  The next inflation figures figures are produced on Thursday night- if these are very low then markets may panic that the Bank of Japan will step in to weaken the currency again, seeing a lot of regional volatility in exchange rates as the Yen moves.  Over the sea, Chinese Manufacturing PMI is published over the weekend of Chinese New Year, so a strong showing here would be good news for Aussie strength.

 

RBA Decision & BofE Next Week

Whilst I think it is unlikely the RBA will change stance on Tuesday, these rate decisions always provide for a fair amount of currency speculation and no doubt Tuesday will be the same with all the variables of the next few days.  Again I do not expect any action from Carney or the other members of the MPC, given they have talked down the prospect of any imminent rate hike but if you are selling Aussie Dollars then my approach would be to try and doing something earlier rather than later in the year.  A well placed limit order could be the ticket to mximising your exchange in a choppy market so if you would like some assistance with an Aussie Dollar transfer then please feel free to email me at cmg@currencies.co.uk or call Colm on 0044 1494 725 353 and I would be happy to help.