Inflation holds back RBA rate hike
GBP/AUD remains range bound at present. Sitting between 1.75-1.80. Recent news from the Reserve Bank of Australia (RBA) is that there is little chance of an interest rate hike this year. Inflation is the key restraint on a hike.
This could cause prolonged Australian dollar weakness as investors will moving to the green back. The US dollar is considered a safe haven currency and currently offers the same level of returns as the Aussie at 1.5%.
There are also several rate hikes expected by the Federal Reserve later in the year which again will push investors toward the US dollar and away from the Aussie which is considered a riskier currency.
It will be interesting to see how the newly appointed Fed chair, Jerome Powell will address interest rate policy. His tone will no doubt influence the markets as investors wait with baited breath for any news on rate policy moving forward. The current state of affairs does not bode well for the Australian Dollar, the one positive for Australian Dollar sellers buying sterling is the 1.80 resistance point remains intact at this point.
Iron Ore Pricing heavily influences
Regular readers will be fully aware of the influence Iron Ore prices can have on the Aussie. Australia’s primary export is Iron Ore and as such movements in Iron Ore price can affect the Australian Dollar. China is the main purchaser so if you have a trade involving the Australian Dollar it is worth keeping an eye on Chinese growth data.
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