This is the same story over the past few months, and will likely give us the same patterns.
Markets have been obsessed with how the Chinese data to be released on Thursday morning could effect global exchange rates. Poor news out of China has seen rates on GBP/AUD catapulted to new highs almost twice a month since August.
As a big buyer of Australian exports, any indications of weakness in the Chinese economy has directly resulted in poor confidence for the Australian economy going forward, which translates into Australian Dollar weakness.
Since Monday, markets have been talking morbidly about the release of further Chinese data tomorrow which is set to confirm the continuation of a major slowdown in their economy. Hence, we are expecting further Australian Dollar weakness overnight.
However, two facts must be at the forefront of anyone looking to purchase Australian Dollars.
These rates have continued to fall down from these spikes upwards, and those buying levels are not sustainable. Plus a string of positive data from the Australian economy recently (positive employment and trade figures) is helping to correct GBP/AUD faster than expected from these movements in the favour of buyers – so be ready to move 24 hours following the data release.
Furthermore, Chinese data is now starting to weaken Sterling itself. This prolonged bout of Chinese depression on the markets is started to make an interest rate hike in the UK for 2016 less and less likely. You can’t raise rates if future forecasts for the demands of your goods and services are now dropping. The lesson from this is that this spike will not be as high as we have previously seen.
Anyone looking to buy AUD in the next month should be looking to jump on this opportunity. There is no more data expected for China during most of October, as a result we will get a repeat of familiar patterns recently, where GBP/AUD gradually correct themselves, as most currency traffic goes into the Australian Dollar due to its cheapness and devalues the currency.
I strongly recommend that anyone with Australian Dollars to buy should contact me on [email protected] to receive a free quote on their transfer and my personal opinion on how to maximise the returns on any planned transfer. I offer a rate beating guarantee here to make sure you make the most of any positive spikes rather than missing out on the best rates available in 8 years.