Australian Dollar Gains on Better Employment Data (James Lovick)

AUD GBP Lower Ahead of PMI Data for the UK Economy

The Australian dollar has come under considerable pressure over the last couple of weeks. Political developments from the US and notably the Trump administration are creating volatility not just for the US dollar but the Australian dollar as well. The missile strike on the Syrian airbase and the warships heading to the Korean peninsula are seeing investors heading for the safe havens notably the Japanese Yen and gold. The commodity currencies which include the Australian dollar have been negatively impacted by a reduction in demand for the riskier assets.

However, the Aussie has however strengthened well this morning after a raft of data overnight. Australian unemployment has held steady at 5.9% but it is the full time employment numbers which almost doubled from the last reading which have had a positive impact.

Why is the French election so important for the Pound vs Australian dollar?

Those clients with a GBP AUD requirement should pay close attention to developments in the French election which is just ten days to go for the first round.
Any suggestion that Marine Le Pen has a chance of winning this presidential election could prove to be a boost for Britain as it will highlight that resentment of the European Union is not isolated to Britain. The negotiations are likely to start on a different footing which one could argue could help the UK and the pound could strengthen. Furthermore a Marine Le Pen win would likely create huge uncertainty and global investors may well decide to pull out of riskier currencies like the Australian dollar. This would have the effect of weakening the dollar.

All of this of course depends on that final outcome but my view is that the markets are yet to start pricing in this eventuality. Those clients looking to sell Australian dollars for pounds would be wise to consider taking advantage of the current attractive levels as the dollar may continue to weaken in this politically uncertain period.

If you would like further information on Australian dollar exchange rates or any of the major currencies and to discuss how we can assist then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on [email protected]