Despite many analysts forecasting further falls in value for the Aussie Dollar, I personally think it will hold its own or possibly claw back more ground against the pound. Recent Chinese inflation data was lower than expected, and Japanese growth was below forecast, but in my view this will only trigger China and Japan to try and aggressively boost their economies which means one big thing- an increase in manufacturing. Any increase in this sector will only fuel increased demand for Aussie raw materials, whether it be coal and iron as raw materials for heavy industry, or copper and other precious metals in high end electronic manufacturing, this can only be good news for the Aussie.
RBA Governor Glenn Stevens has been very clear that he has no plans to adjust the base rate of interest, and they arent overly happy with the current levels of the Aussie Dollar (they still see it as historically strong) there is no desire to try and intervene to weaken it artificially. Given the US economy is gradually improving I anticipate an improvement in the outlook for global confidence which should give the Aussie reasonable support. With the Bank of England unlikely to change its interest rate guidance unless UK data picks up sharply I think GBP AUD will actually be relatively range-bound in the near term so would look to use stop loss and limit orders just to catch rates on a positive spike.
On the Euro side we have seen the Euro strengthen dramatically since Thursday’s ECB decision as the markets were taken by surprise by the fact they not only didnt change policy at all, but actually increased their growth forecasts and outlook. Personally I think this move will be temporary and suspect there will be some bounce back as people realise Europe still havent solved all their problems. The key to me in the short term will be whether or not Australia can turn around its disappointing jobs figures of late, but if you do have a currency transfer to make please feel free to contact me Colm, at [email protected] or call me on 01494 787 478. I would be happy to talk you through our services and show you how you can optimise your exchange rate.