Despite unfavourable global tensions and concerning international trade data over the weekend, the Aussie Dollar has just about been able to hold its ground against its major currency counterparts. Political turmoil in Germany has undoubtably drawn a lot of investor appetite away from riskier commodity-based currencies like the Australian Dollar. The report below discusses the impact of international political uncertainty and poor economy on the Aussie Dollar. The table below shows the range of exchange rates during the past week, showing the different in AUD you could have achieved when selling £200,000.00 during the past week.
|Currency Pair||% Change||Difference on £200,000|
This compounded with the really poor manufacturing data coming out of Australia’s main trading partner, China, you could have been forgiven for expecting the AUD to start the month on the back foot.
The Aussie has stayed strong however having barely conceded 0.3% against the Pound since last week’s impressive rise. It suggests to me that we may be seeing renewed signs of robustness from the Aussie Dollar, making target rates in the 1.80s seem far less viable. Something to consider if you have a short term Australian dollar requirement.
Looking long-term I do feel like the odds are stacked against the Aussie. Aside from the escalation in international protectionism potentially hampering the access of Australian goods on the global markets, the Reserve Bank of Australia’s statement last night will have done very little to draw interest to the Aussie. Having kept interest rates on hold at record lows of 1.5% as expected, the markets will have been watching closely for some signs of positivity particularly after yesterday’s release by the AFR (the Australian Financial Review) quarterly survey suggesting that investors holding out for higher yields through a pick up in rates will have to wait at least until this time next year.
Unfortunately, the RBA echoed those sentiments offering very little insight into just where the desperately needed pick up in domestic inflation will come from. I feel it is only a matter of time before the interest rate differential to the USD will begin to weigh on the Aussie and expect it to become less valuable further down the line.
Those looking to buy Sterling with AUD may be wise to consider their positions before this trend begins to kick in. Last night’s impressive building permit’s release (9.9%) has offered a brief spike to capitalise, particularly ahead of tomorrow’s potentially precarious trade balance data.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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