The Aussie Dollar has managed to claw back some ground in the last couple of days as the RBA took the possibility of any interest rate change of the table. However data in Australia lately has been a little bit shakier than this time last year so will tonight’s retail figures have any impact on exchange rates? In truth I don’t think it will be as significant an impact as some commentators are suggesting given the population size and I think any movement will be temporary as the markets continue to focus on interest rate expectations and other external factors like demand from China.
To this end keep a watchful eye on data overnight Thursday for Chinese services and the monetary policy statement, and Fridays US non farm payroll data as the level of US jobs is still the main determining factor on the pace of the US Federal Reserve tapering their Quantitative Easing program. QE has been a significant factor in Aussie Dollar strength over the last few years, as investors have been able to borrow money cheaply Stateside and then use it to fuel investments Down Under. Now it is being unwound, the Aussie Dollar has been sold off dramatically in response. Janet Yellen has now taken over at the Fed and it appears as though they will taper at a rate of $10bn a month, however the jobs rate could accelerate or delay this if the data is extremely high or low.
Given the RBA are not likely to cut, and Mark Carney at the Bank of England has made it clear a UK hike in the near future is out of the question, I still think there is scope for the Aussie to gain a little ground versus the pound. However currencies do not move in straight lines, so timing the day of your currency transfer is absolutely key. If you would like more information about how to get the best foreign exchange rate then please feel free to email Colm at [email protected] or call 01494 787 478 for a free no obligations quote and discussion of your exact requirements.