Following some big falls for Sterling vs Australian Dollar exchange rates during the last month we have seen a reversal of fortune overnight following some very weak data published in China.
Chinese import data showed a huge fall of -17.7% and exports were also extremely weak.
Oil prices have also fallen to their lowest level in 6 weeks, which is likely to raise concerns of a global slowdown.
The Australian Dollar is heavily influenced by what happens in China as they are Australia’s largest trading partner and any slow down sees often sees weakness for Australian Dollar exchange rates.
With commodity prices still close to a 16 year low I think the long term forecast for the Australian Dollar is rather bleak.
Chinese GDP is now below 7% and with fears of further slowdown in the future this could impact heavily upon the Australian economy.
Tomorrow Chinese inflation data is published and this could show more problems for the economy and could perhaps hint that another interest rate cut for the world’s second largest economy could be round the corner.
Arguably the biggest data release of the week will come in the form of Australian unemployment data due out on Thursday.
Expectations are for 6.3% so anything different could cause volatility for Sterling vs Australian Dollar exchange rates.
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