Those of our regular readers hoping for a higher Aussie Dollar will be aware of how its upside is currently limited, and how the the US Dollar is partly behind the softening Australian Dollar.
The most simplistic way of looking at it, is that now the US Dollar is in many cases offering a higher rate of return than the Australian Dollar, investors are more likely to hold funds in that currency as opposed the the Aussie. Previously AUD offered one of the highest rates of return within the developed world and that resulted in a strong Aussie Dollar.
The issue now is AUD has a long way to fall if it’s to return to more familiar trade levels when we consider historical levels, which is perhaps why some predict to see it continue to fall. To put the US Dollars increased attractiveness into perspective, the US Dollar Index (which measures the US Dollars performance against a number of major currency pairs) has risen 3% since April the 16th. A clear indication of how investors are pooling funds into the currency.
The Reserve Bank of Australia on the other hand is adopting a different approach to the Fred Reserve Bank in the US. There are no interest rate changes from the RBA expected until next year, which is perhaps another reason that some economists are expecting to see the Aussie Dollar fall.
If you have a large currency exchange to carry out in the coming days, weeks or months then you are more than welcome to speak with me directly as I will be more than happy to help you both with trying to time a transaction and getting you the top market rate when you do come to buy your currency. A small improvement in a rate of exchange can make a huge difference so for the sake of taking two minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can email me (Joseph Wright) on [email protected] and I will endeavour to get back to you as soon as I can.