In recent weeks the US dollar has gone from strength to strength and investors are second guessing that commodity currencies will continue to come under pressure in the weeks to come. The US dollar index which measures the US dollar against a basket of major currencies is up 3% since mid April. Furthermore 10 year US bond yields have broke through 3% for the first time since 2014. When bond yields are on the rise this tends to mean the central bank have another reason to hike interest rates.
Over the last few years speculators have left their assets in the Australian dollar due to the higher interest rates. But now that the US have hiked and it appears that further hikes are on the horizon I expect speculators will continue to sell off their Australian dollars in a bid for higher returns elsewhere. In regards to USDAUD exchange rates the Australian dollar has dropped below 0.75 for the first time in 10 months.
The problem the Australian dollar has is that the Reserve Bank of Australia have announced that there is no reason to hike interest rates anytime soon and some economists are suggesting the Australian dollar will be left behind as a hike doesn’t look likely for at least 18 months.
When buying or selling Australian dollars its always important to analyse both currencies you are converting. For example it looks like AUDUSD will continue to fall in the weeks to come as the US dollar continues to strengthen therefore selling Aussies to buy US dollars sooner rather than later may be wise. However if converting AUDGBP, the pound is under pressure because of Brexit and the Bank of England holding off for a period may be wise.
For people that buy and sell Australian dollars on a regular basis or are looking to make a one off transfer, the currency company I work for can save you money. Feel free to send me the reason for why you are converting currency, the currency pair you are trading (AUDGBP, AUDUSD), and the timescales you are working to and I will send you my forecast and the process of using our brokerage [email protected].