The Australian Dollar has struggled generally, seemingly as a result of the unresolved trade war situation between the US and China, China's economic data came out a little below expectations overnight, as China is Australia's main export destination this impacted AUD negatively. The table below shows the difference in AUD you could have achieved when buying £200,000.00 during the high and low points of the past week.
|Currency Pair||% Change||Difference on £200,000|
The Australian Dollar is very much known a ‘riskier’ currency and current global trade wars, particularly those involving China and the U.S will not be doing it any favours at all.
In times where there are global problems you do tend to find that these riskier currencies can tend to weaken, and that is exactly what we have seen of late with the Australian Dollar.
Since the start of 2018 a £200,000 purchase of Australian Dollars would currently achieve you almost AUD 22,000 more for your money, which is an increase of more than 6% in just over three months. Now that is not a return to be sniffed at, especially with interest rates around the globe still at particularly low levels at present.
These trade war issues could blow up further at any time, at present it looks like China have moved to dampen them down which may give the Australian Dollar a break,. But for anyone looking to sell Australian Dollars it may be prudent to seriously consider your options in case further issues arrive.
We had a little economic data out from Australia and China overnight along with a speech from the RBA’s Philip Lowe. Australia data was ok but Chinese data was a little lower than expectations, poor Chinese data can lead to weakness for the Australian Dollar due to the sheer volume of exports between Australia and China. RBA Governor Lowe’s speech was probably the biggest talking point of the night, he commented that he did not see the case for a near term move in interest rates. Although expectations are for no rate movements from Australia until at least the end of the year.
An interest rate hike is generally seen as positive for a currency as it makes it more attractive to investors, and the fact that Australia may be holding off a lot longer than other major economies may lead to further weakness for the Australian Dollar in the coming months.
I still would not be surprised to see GBP/AUD rates test 1.90 in the short term and even 2 later in the year as long as we avoid any Brexit troubles.
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