The consumer prices across the whole of Australia’s cities were looking particularly low with only a few places reporting inflation above 1.0%. This has essentially put the nails in the coffin for the RBA and they are once again looking likely to act.
The Reserve Bank of Australia is mandated to maintain an inflation level of 2-3%, currently the rate has remained below 2% for 18 months. What this means for AUD sellers is that the rate could move significantly against you as a rate cut will weaken the AUD. Alternatively if you’re a buyer of AUD then you may have a well-received window of opportunity after major recent losses.
Sterling Could Have its Own Problems
A week after the Reserve Bank of Australia decision the Bank of England will decide the UK’s interest rate. After the Brexit victory it has always been on the cards that should the economy slow down there is a real chance of a cut. There has been some data supporting a slowdown for the region; however there is also data suggesting the effects haven’t fully taken impact.
The decision will be made on the 4th August and if Governor Mark Carney along with the central bank do cut rates then Sterling like the AUD may fall. Whilst some analysts believe the rate cut is priced in I don’t think it is completely. Therefore if there is a cut I would not be surprised to see the GBP/AUD rate fall back towards the 1.70 level.
The AUD rate cut could come a few days earlier than the Bank of England’s decision so Wednesday next week could represent a good AUD buying window with rates nearer the 1.80’s.
As a trader in a currency brokerage I am able to help you achieve the best rates possible, whilst also assisting with the timing of a transaction to make sure you get the most for your money. If you do have a currency requirements please feel free to send me Ben Fletcher an email at [email protected]