The Australian Dollar’s gains from Tuesday were wiped clean during Wednesdays trading as the US/China trade tension rhetoric hit the headlines. Reports late Tuesday revealed that President Trump is proposing a 25% tariff on $200bn worth of goods. The below Australian Dollar report discusses the postive data coming out of Australia despite trade tensions between their largest trading partner and the US. The table below shows the range of exchange rates for GBPAUD for the past month, and the difference in AUD return you could have achieved during this period depending on when you carried out your transfer.
|Currency Pair||% Change||Difference on £200,000|
Initial plans were thought to be 10% on goods imported into the US and as an export driven economy, the jump to 25% has certainly spooked investors.
The rise in tariffs to 25% could cause the dispute between China and the US to escalate, which is a possible reason for the AUD weakness on Wednesday. Fears of a global trade war in the past has caused investors to pull their assets from the riskier based commodity currencies such as the AUD in the past and has been the main weakness for AUD weakness of late.
With this in mind, we may now see a push towards the 1.80 level for GBPAUD a distinct possibility in the up and coming month.
The latest trade balance data for Australia was released in the early hours of this morning and was double the expected. The trade surplus was expected to be $900m however was $1.8bn. What this does suggest is that trade tensions between the US and China may not have quiet filtered into other economies, or businesses are panic buying before anything changes.
If the manufacturing driven economy of China were to feel the pressure as a result of the tariffs being imposed from the US, the main export of Australia - Iron ore would be in less demand and could lead to AUD weakness. So far the data has helped the AUD to keep afloat, but this may not continue.
Tomorrow will see the release of the Retail sales data for Australia which is it expected to show a slight decrease from 0.4% to 0.3% for the month of July.
I would expect the main driver for the AUD to continue to be the ongoing trade war saga. Clients with an upcoming AUD requirement may want to keep an eye on developments from the world’s two largest economies.
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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