Australian interest rates have now remained on hold at 1.5% since August 2016 and that does not appear to be changing any time soon. In this report we look at what's next for Australian Dollar exchange rates.
The table below shows the difference you would have received when converting £200,000 to Australian Dollars at the high compared to the low yesterday:
|Currency Pair||% Change||Difference on £200,000|
The Australian dollar is expected to come under further pressure as the RBA keeps interest rates on hold for the foreseeable future and possibly for years to come. The Aussie is likely to be impacted as other economies around the world are already well ahead in terms of the cycle of tightening monetary policy. Compared to the US Fed for example it could be a matter of years before the RBA catch up with a series of interest rate hikes. The Aussie is now the second worst performing currency amongst the G10 economies. The RBA have concerns over weak economic growth and also low inflation which is limiting the central banks’ ability to raise rates.
The Australian dollar has also suffered a rocky ride with the ongoing trade tariffs being imposed by the US and China. There are concerns that any further escalation in this trade dispute between the two nations could impact on Australia’s iron-ore export market. This Thursday sees official import and export data and Australia’s trade balance which should give the markets some idea as to how much of an impact the trade tariffs have really had to date. Home sales and building permits should also give some indication as to the health of the housing market down under which has reportedly been overheating.
Those clients looking to sell Australian dollars for pounds should pay close attention to the Brexit cabinet meeting tomorrow as any further clarification on the future Brexit deal is likely to result in significant volatility for the GBP/AUD pair.