According to many sources the Australian Dollar could be under real pressure in the long term as the Chinese economy continues to slow and the US Federal Reserve continues on their path of raising interest rates.
The Fed has already raised rates 7 times since December 2015 and have already increased rates twice during the course of this year as well.
The Australian Dollar has hit its lowest point vs the US Dollar in twelve months and this has also been caused by the ongoing Trade Wars between the US and China.
The Australian bond yields have now dropped below that offered by US Treasuries and this could get even worse as as the Fed continue their path of raising interest rates later this year.
At the moment the view from the Reserve Bank of Australia is that they are likely to keep interest rates on hold for a long period of time and this is why the Australian Dollar has weakened recently heading in the direction of 1.80 recently.
With the Bank of England due to meet tomorrow afternoon I think the central bank will keep interest rates on hold once again with a 7-2 split but with the UK showing some very positive Retail Sales earlier this month I think we could see some signs that an interest rate hike could be coming sooner than the markets expects and if this is the case we could see the Pound make some further gains vs the Australian Dollar towards the end of the week.
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Tom Holian [email protected]