The Reserve Bank of Australia are due to meet overnight to decide what they will be doing with monetary policy.
As far as I’m concerned a potential interest rate hike is a long way off for a number of reasons. Trade with China appears to be slowing down recently and this is why we have seen some Australian Dollar weakness against Sterling during the last few months.
Indeed, as China is such a large trading partner with Australia any negative announcements will impact what happens to the Australian Dollar and also the decisions due to be made by the RBA.
The bond yields in the US are now as high as 3% which is the highest level since 2011 and this has encouraged global investors to bypass the Australian Dollar in favour of the US Dollar.
The Australian economy has also been struggling as the price of iron ore has been falling which is the country’s biggest export as well as the Chinese equities market and this is likely to have a negative effect on Australian GDP going forward.
One of the main responsibilities of a central bank is to use policy to control both GDP and inflation so this is another reason why I cannot see interest rates going up for a very long time.
I think we’ll see GBPAUD exchange rates going in an upwards direction overnight so if you’re considering buying Australian Dollars then it may be worth seeing what happens with tonight’s monetary policy announcement.
On Wednesday the Chinese release their latest manufacturing data and I think another slowdown could see GBPAUD exchange rates continue with their gains.
If you have a currency requirement to make and would like to save money compared to using your own bank then contact me directly and I look forward to hearing from you.
Tom Holian [email protected]