China Stimulus cause Australian Dollar Weakness (Tom Holian)

AUDGBP Continues to Rise, But How Long For?
Tom Holian

Sterling Australian Dollar exchange rates have once again continued to pick up after news this morning that China’s central bank has pumped money into the economy. This process is similar to Quantitative Easing which is what has been used in the UK and typically is can be damaging to the currency involved.

It also shows signs that the Chinese economy has struggled recently and with the news that the Chinese economy has dropped to its lowest level since 1999 things are looking rather unsteady.

With this news this has caused concern for global investors having money in Australia. As the economy down under is heavily reliant on Chinese demand a slowdown is likely to have a negative effect on the Australian economy and also the Aussie Dollar.

Reports are that the Chinese central bank have added the equivalent of USD42bn into the financial system and the interest rate has also been trimmed. Longer term this could help the Chinese economy as the same has happened in the UK and if you look at Sterling it is clear that its had the desired effect.

Tomorrow morning the UK publishes both Bank of England minutes and the Claimant count. This could cause volatility for GBPAUD rates during tomorrow’s trading session.

If you’re concerned about exchange rates and have a currency transfer to make soon then contact me Tom Holian teh@currencies.co.uk