US Rate Hike could push Investors away from the Australian Dollar (Daniel Johnson)

Australian Dollar to Pound Forecast: Risk Sensitive AUD Likely to Remain Under Pressure

Could Trump force Yellen’s Hand

The Australian Dollar has been particularly attractive of late due to it’s relative safety compared to other major  currencies and the promise of high interest. The current rate level is at 1.5%.

Trump has strong views on where interest rates should be in the US. At the beginning of the year the FED indicated there would be several rate hikes throughout 2016, none of which have been yet to materialise. Although the FED is meant to act as a separate entity to the government, recent political uncertainty due to the Presidential election could held back any decision to raise rate by the FED. Trump has widely criticised Janet Yellen, the FED chair for the lack of hikes and has threatened to remove her from her position. There has been positive data both in manufacturing and unemployment and I would very surprised not to see a rate hike on 14th December. Although this will be largely filtered into current rates of exchange if there is an excessive sell off of Australian Dollars as investors seek the safe haven of the US Dollar we could expect the Aussie to weaken.

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