The Australian dollar came under pressure in afternoon trade yesterday taking considerable losses against most of the major currencies. Rates for GBP AUD have climbed higher breaking over 1.79 for the pair which has created a good opportunity for those clients looking to buy Australian dollars with pounds.
The weakness in the Aussie has stemmed from events in the US rather than negative data down under. The new economic adviser to US President Donald Trump has signalled he is in favour of a strong US dollar whilst also signalling that he is preparing for another round of tariffs which will target Chinese exports.
The prospect of a trade war appears to be looking more likely on the back of these comments and the commodity currencies including the Australian dollar are likely to be impacted upon badly. The Canadian dollar in particular has come under substantial pressure on the back of protectionist policies and the Aussie may have further to fall. Clients looking to buy Australian dollars in these coming weeks could see some even better opportunities to purchase with a move higher to 1.80 for the GBP AUD pair looking likely. Whilst the steel and aluminium tariffs imposed so far have had little real market reaction any other measures could see the Australian dollar come under renewed pressure.
The dollar had until recently been supported following upbeat trade data from China which is normally seen as a vote of confidence for the Aussie but the comments from US economic adviser Larry Kudlow. Australia’s largest export market is China and so when the Chinese economy is performing well it is generally a good sign that global economic growth is being seen and Australian exports are on the up. Any perceived slowdown in economic growth is likely to result in a rocky ride for the Aussie going forward.
For more information about the Australian dollar and how to try and make the most of any opportunities for buying or selling Australian dollars then please get in touch with me at [email protected]