AUD boosted on stronger construction

The Australian Dollar received a small boost after another positive data release saw an improvement in the construction sector. Data from the Australian Industry Group (AIG) showed the sector expanded in February having contracted the month prior. The figures demonstrate a resilient economy down under and point to potential further gains for the Aussie Dollar. The housing market is also looking particularly buoyant. Those clients looking to sell Australian Dollars for Pounds are seeing another excellent opportunity.

Political developments in the UK next week when the House of Commons review the House of Lords Brexit amendments could see the Pound rally so those clients selling Dollars would be wise to consider taking advantage of the current higher levels.

Reserve Bank of Australia hold interest rates

The Reserve Bank of Australia held interest rates earlier this week at 1.5% as widely expected. RBA governor Glenn Stevens stated that “An appreciating exchange rate would complicate the Australian adjustment” which signals that interest rates are set to remain low for the foreseeable future.

There is a growing chance that Australia may even be forced to cut interest rates this year with some commentators even pointing towards a fall down to 1%. Any downturn in the Chinese economy could see a reversal of the rally in commodity prices which has helped boost the Australian Dollar in recent months. The performance of the Aussie Dollar does stem to a large extent from the strength of the Chinese economy.

The Australian Dollar will be particularly impacted by events in the US this week with considerable focus on the US Fed’s path for interest rates this year. Tomorrows’ US Nonfarm payroll numbers have the potential to create substantial volatility for both the US and Australian Dollars.

Anything in the numbers that could cause the US Fed to hang fire on that likely March interest rate hike could see the Australian Dollar strengthen further.

If you have any questions about the Australian Dollar, specifically regarding what impacts its value, why not get in touch with one of our currency experts on 01494 725 353?

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