The Australian dollar had made up ground against the pound over the past few trading days, which appeared to be mainly due to the fact that some of the harder hit countries such as Italy and Spain had started to see a fall in their number of COVID-19 cases and deaths, which lifted investors’ spirits and could potentially had given them an interest in perceived ‘riskier’ currencies such as the Australian dollar.
Over the past 24 hours however, we have seen the pound gain back a vast amount of ground on the Australian dollar Which may be likely down to U.S President Donald Trump and his attack on the World Health Organisation, threatening to pull his funding for them and also citing the fact that their handling of the global pandemic in its earlier stages regarding China had not been acceptable. We have also seen a cut in interest rates and some fiscal stimulation over in China overnight too.
Most readers will be aware that we have had plenty of tension between the U.S and China over the past year or so, most notably around trade deals. Unfortunately for those holding Australian dollars a common occurrence when tensions rise between the U.S and China is that the Australian dollar tends to weaken, due to the economic ties between China and Australia and also down to the fact that the Australian dollar is deemed as a ‘riskier’ currency. In times of global tensions the riskier currencies do often lose value.
AUDUSD Weakness Also Impacting Export Based Aussie dollar
Another issue that appears to be facing Australia is the weakness seen currently against the USD. Currently AUDUSD exchange rates are close to a 17 year low, usually this would be a great situation for Australian exports, but with the current lockdowns around the world and trade being down significantly, all this is adding to is the cost of various goods and services from some parts of the world which may start to make the cost of living in Australia higher in the coming weeks and months.
We have a number of key issues being faced around the world at present so those holding Australian dollars would be prudent to keep a keen eye one what happens next, most specifically with Trump and China. You may remember that a simple tweet from Trump which can come at any time has been known to move the market fairly significantly so this does plunge us into a difficult time for market predictions and what may happen next.
If you are holding Australian dollars and you wish to buy pounds or you have Sterling to exchange into Australian dollars then it is key you have a proactive and well informed Account Manager to help you negotiate a difficult market at the moment. If you wish to speak with me directly, feel free to fill in the form below and I will be happy to call you personally to discuss the various options that we have available to you that may help you reduce the risk created by adverse market movements.