Australian Dollar Forecast Retains Majority of Strength

AUD GBP Higher Despite Higher UK GDP Number

Since a week ago today, the Australian dollar forecast has continued to gain a little more ground against the majority of major currencies, despite news that hit the wires regarding issues with China and a limitation on various imports that may come into play, including, coal, iron ore and coral.

With China having such a large influence on the Australian economy due to the close ties, historically any negative news from the Chinese economy or a rise in tensions can often lead to Australian dollar weakness, but it does seem that at present the Australian dollar seems to have quite a backbone to it, certainly compared to the large drop off we witnessed in the middle of March.

AUD GBP exchange rates are hovering around 0.54, AUD USD 0.6620 and AUD EUR 0.60 at interbank levels, all showing a minor increase from last week – but why may this have happened with what could be deemed as bad news from China?

Coronavirus Performance Appears to be Keeping Australian Dollar Strong

Although there have been minor incidents in Australia this week it does seem that the general domestic performance surrounding COVID-19 and the small number of cases and deaths that Australia has had do seem to have given Australian dollar exchange rates a boost.

People in Australia are starting to see a number of things get back to normal (or the new normal) and thus the economy has sprung out of the gates compared to other areas around the globe.

If you look at the Coronavirus cases worldwide and had to choose an area to live in with no restrictions then it would not surprise me to see a vast amount of people choose Australian or New Zealand, and with that in mind it is no surprise that investors and speculators are rushing to the AUD and NZD as a result.

Will the Australian Dollar Forecast Strength Continue?

Those of you that have Australian dollars to sell in the coming weeks and month must still approach this current market with great caution, it should be remembered that the Australian dollar is still deemed as a riskier currency, so a second phase of COVID-19 or a large global recession may still have the potential to weaken the Australian dollar forecast quite considerably.

Back in the middle of March we saw significant losses for the Australian dollar against Sterling, U.S dollar and euro and with various reports that have looked back in history to previous pandemics and the likelihood of a second wave there is always a concern that we may see this globally.

What can I do to protect myself?

Most currency exchange providers will offer a variety of contracts that will help protect you against adverse market movements, the brokerage that all of the writers on this site work for certainly does too.

The most used at present are forwards contracts, limit orders and stop losses and a variety of clients are also hedging their risk as their requirement moves along. Rather than trying to hit the bullseye and get the best exchange rate on one lump sum, they split their requirement into chunks. This method means that you don’t kick yourself for jumping in too early if rates keep going up, as you still have a healthy sum to purchase, but equally should the rates move back against you then you are not as exposed as you have netted off some of your position.
Feel free to fill in the form below to speak with me directly. I will be happy to discuss your needs, with over 12 years helping people moving money internationally I have helped thousands of people in the same position as you and so I would welcome a discussion surrounding your specific situation.