Private Sector Credit increased in Australia which is a good sign since it shows the private sector expanding. However it illustrates a worrying point over personal debt and credit, which has been a major hindrance to the RBA, Reserve Bank of Australia, in raising interest rates. Household debt to income is exceptionally high in Australia and many Australians could find themselves in negative equity too.
The Australian dollar could therefore find itself much weaker in the future as the RBA has to pause for thought in its plans to be raising interest rates. This is a domestic issue but we could also see more global issues weigh on sentiment, examples would include the Trade Wars and an economic slowdown in China. Expectations are for the Trade Wars to intensify, this would heap pressure on the Aussie dollar too.
The pound to Australian dollar rate is very close to the post-Brexit highs, nearing the 1.84 level seen in April. With the pound looking like it could easily come under more pressure following Brexit, clients with a position buying Australian dollars could be looking at a very good time to buy their currency. In the months and weeks ahead we are expecting to hear of more news on the Brexit which might derail sterling, Boris Johnson has released his Brexit manifesto this morning and whilst he has lost credibility in recent months, he could present a threat to GBPAUD rates.
Over the weekend we have the latest Conservative Party Conference where Boris Johnson will soon be attracting more attention. Could he trigger a fall in PM May’s position? Expectations are for a volatile pound ahead, if you need or wish to buy or sell Australian dollars this could be a key time to be making plans.
If you have a transfer to buy or sell Australian dollars then making plans in advance seems to be the best bet with all manner of outcomes possible. If you have a transfer to make, please feel free to get in touch for information to help with any decisions on the best rates to aim for and strategies to take.
Please email me Jonathan Watson on [email protected] to learn more.