The Australian dollar has bene impacted by new developments of late and much of it revolves around the Reserve Bank of Australia’s (RBA) thinking. Reserve Bank of Australia Governor Philip Lowe will be speaking this evening and he is likely to reflect on the state of the economy to include the Australian housing market and future interest rate policy.
There have been recent concerns as to the health of the property market down under and suggestions are being made that mortgages offered without deposits could be the trigger for something more sinister and may have some similarities to the Sub Prime crisis in the US which triggered the financial crisis of 2008. The RBA are therefore highly unlikely to want to raise interest rates and cause a potential collapse in confidence. If anything it looks to me like an interest rate cut could be just around the corner and this could result in further dollar weakness.
Developments in the US are also helping keep pressure on the Aussie considering trade agreements are all at stake. The US only recently slapped on tariffs on Canadian lumber and there is a strong chance that other tariffs may be imposed elsewhere. The Australian dollar which is perceived as a riskier currency does not perform well under these conditions.
Those clients with a GBP AUD requirement should pay close attention to the UK general election. The pound has started to soften over the last week after the very high inflation numbers from last week showed British pockets are being squeezed by a lack of real wage growth. The week data and uncertainty of a general election are likely to keep the pressure on the pound in the run up to 8th June. Clients selling Australian dollars may see a good win opportunity in the next couple of weeks. Assuming the election result is a conservative majority as widely expected then the pound could see a good rally on the 9th June after the winning party is announced. Sellers may wish to secure before this important date in the calendar
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]