Today’s RBA (Reserve Bank of Australia) interest rate decision and press conference has added further fuel to the fire for Australian Dollar weakness in the coming months.
With the view that dropping commodity prices and the fact that the RBA have now held interest rates for a record breaking 18th monetary policy meeting in a row, it does appear that there may be a fightback from other major currencies against the Australian Dollar.
As mentioned in previous posts an interest rate is of great importance to a currency as it makes it more or less attractive to investors, what we are seeing in other areas around the globe is other economies starting to raise interest rates, most notably America and the U.K and this is in turn leading to a flow of money out of the Australian Dollar and into the perceived safer currencies, thus making the Australian Dollar weaker and more expensive to buy.
Expectations are currently for the RBA to potentially make their next interest rate move in November of this year, if this is the case then we are likely to have seen one further rate hike from the U.K and potentially two more from the U.S before that happens, which may lead to further weakness as the year progresses.
We are at the start of a new month so be sure to keep a keen eye on Australian economic data this month as this may impact on what the RBA decide to do.
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