China data give sellers some opportunity (Steve Eakins)

Increase in Risk Appetite Helps Support the Australian Dollar

GBPAUD rates have again been climbing, 2.20 has been officially broken now with little levels of resistance. As a result as we start the next cycle of economic data over the next fortnight I really expect levels to climb to new highs so great news for buyers. Sellers however have to be very aware and realistic with regards to target levels that are achievable.  Rates have been against them for several months, arguably years with level after level being broken.  Clients have held funds with a hope that rates will drop back under 1.80 when levels were at 1.90, under 2.02 when it was at 2.05 and now waiting for 2.15 when levels are at 2.18 and ALL have been disappointed and lost money!

With Australian data continuing to be poor, the US talking about an interest rate hike, the UK showing signs of improvements and China being more honest about their economic contraction the markets are really only pointing in one direction – that being up. If you are a seller and are holding for rates to collapse make sure that you have a strong economically based argument for your view, rather than simply a hope. With the speed with which rates are moving gambling on simply a hope could easily cost you £1,000’s.

Saying the above however rates never move in a straight line and this pair is well known for its volatility. Generally we are seeing the pair being range bound within 4 cents, even though it is trending in one clear direction.  The next data release on the horizon is China news which again is expected to be negative, more good news for buyers and bad for sellers.

So if you have a trade to make, timing the transfer is key. Limit orders are widely used in this market which is when a target level is set and when reached funds are automatically bought, 24 hours a day, 7 days a week.

For more information on any of the above please get in contact through email – Steve Eakins at hse@currencies.co.uk

I would strongly suggest that anyone with AUD to sell get in contact sooner rather than later!