The Australian Dollar has lost a little ground in trading this week with U.S Bonds being partially to blame for the latest bout of Australian Dollar weakness. The U.S treasury yield has recently hit its highest level in 7 years and the reason this is impacting the Australian Dollar is that this is causing a large flow of money to come back out of the Australian Dollar and into the U.S Dollar, making USD more expensive to buy and AUD a lot cheaper.
Over the past few years we have seen interest rates continue to rise in the U.S and remain stable in Australia and now that the USD is seen as a more attractive and less risky investment investors are starting to make their moves and to shift money back into the Dollar.
It does not look like we will be seeing a move from the RBA to raise interest rates until next year now which in my opinion will continue to hold the Australian Dollar back. Poor wage growth figures matching the 1.9% inflation figure released have shown that workers have not seen any growth in their wages for the past year and wage growth levels are currently sat very close to historic lows.
What this means is that the general consumer has less money in their pocket to spend and therefore this can impact the economy further. It also will hold back the Reserve Bank of Australia from raising interest rates as a move to hike rates now would put homeowners under pressure, so they really are stuck at the moment as to what is the right thing to do.
I believe the RBA will continue to monitor data before rushing anything, but the signs are there for me that we may see a little Australian Dollar weakness in the coming months.
If you are in the position that you need to carry out a currency exchange involving Australian Dollars and any other major currency then you are more than welcome to get in touch with me and I will be happy to help you personally. The brokerage I work for has been operating for 18 years now and we pride ourselves on getting clients not only the best exchange rates on the market but also offering the very highest level of customer service too.
If you would like to discuss a specific scenario or exchange with me then feel free to email me (Daniel Wright) on [email protected] and I will be more than happy to get in touch personally.