The Australian dollar has been weaker in 2019 as the ongoing trade wars continue to threaten the Australian economy. A series of data releases have indicated the Chinese economy is losing steam, triggering some sharp falls on the Aussie dollar. The Aussie has been treading water this week, in anticipation of more important events over the next couple of days.
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On the domestic front we have Australian Consumer Price Inflation (CPI) data, to be released overnight which could be a market mover. Investors keeping a close eye on economic developments in Australia to gauge the possibility of raising interest rates which seems a very far way off.
Importantly this Thursday, trade talks will begin again between the US and China which could see a volatile end to the week on Australian dollar rates. Predicting the outcomes are tricky and the talks may end up with no final result since there is a 1st March deadline before final decisions need to be made.
At times the prospect of a worsening Trade War between the US and China has seen the Australian currency lose ground, any more positive news might help the Aussie to gain.
The answer to this question depends largely on Brexit developments with key news scheduled today in the UK Parliament. There are a series of amendments to Mrs May’s Brexit bill which if voted through, could alter the direction on Brexit. The removal of a ‘no-deal’ option could see the pound higher, whilst the potential for Theresa May to back a backbench motion to seek ‘alternative arrangements’ might just save the UK Prime Minister’s deal and may see the pound higher.
Ultimately, the pound seems destined to continue to keep up the recent volatile form and the chance of disappointment or continued uncertainty holding back the pound still remains high to me.
A saving grace will be a further destabilisation in the US-China talks, which could see us rise closer to 1.90. However, putting my neck on the line, I would not be surprised to see GBPAUD sliding below 1.80 as the pound continues its struggles.
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