How will the Aussie react to events this week?

Will AUDAUD to GBP Slips as Australian States Tighten Borders to USD Retest the All-Time Lows?

Overnight Australian GDP came in stronger than expected which has helped the Australian dollar to cement some of the more recent gains against its peers, notably sterling. With the outlook having previously been fairly balanced as to between whether or not the RBA (Reserve Bank of Australia) would raise or lower rates, it would appear now there is more chance of a rate hike than a cut down the line. This gearing towards a possible tightening of rates is something that will perhaps be more evident over the longer term but is something anyone with an interest in the Australian dollar should take note of.

Looking a bit closer at upcoming events I would highlight tomorrow’s ECB (European Central Bank) and Friday’s US jobs data as big market movers fort he Aussie dollar. This is all because the Australian dollar is a commodity currency which reacts to the sentiments of global markets. Let me give you an example; say there is an increase in perceptions the global economy is improving, the Aussie should strengthen as investors anticipate the Australian economy will benefit due to their abundance of natural resources and connected industries. On the flipside when there are perceptions the global economy is struggling the Aussie may weaken as investors anticipate their economy may suffer.

Around 80% of currency transactions are speculative so an awareness of what drives these speculative moves is essential to understanding currency movements particularly on the Aussie. If you need to buy or sell the Australian dollar we work as specialist currency brokers and can offer assistance on moving funds internationally at the best rates. Please feel free to contact the author directly on [email protected]