Will the Aussie Dollar weaken now that it’s appeal is diminishing?

The Aussie Dollar has been one of the best performing currencies against the Pound this year, with the currency gaining on the Pound over the past 52 weeks by a greater margin than the Euro and the US Dollar have managed.

Much of these gains can be attributed to the Aussie Dollars attractiveness in terms of its rate of return, quite simply, deposits held in AUD have been yielding a greater return than pretty much all other major currencies.

Now that there’s a high chance of an interest rate hike from the US Fed Reserve bank in the US, it’s likely that investors will begin moving their funds from high yielding commodity currencies such as AUD, and into the US Dollar which is considered more secure, amongst other major currencies should they follow suit.

Considering that the Aussie Dollar has lost over 10 cents over the past month or so vs the Pound, it appears that this pattern has already begun and I’m expecting to see the currency continue to weaken as time progresses.

The Reserve Bank of Australia’s final meeting of 2016 took place yesterday and officials expressed concerns that the economy is likely to perform poorly towards the end of this year, which could be the catalyst for additional AUD losses which could push GBP/AUD back above 1.75.

Busy end to the week for Australian Dollar exchange rates a possibility

In the early hours of this morning Australian GDP Figures both for the year and for the quarter were released. Both failed to meet expectations with growth in the last quarter dropping to -0.5% after expectations of 0.3%, and as a result the Aussie is the worst performer against the Pound so far this morning.

In the early hours of tomorrow there will be an overview of both Imports and Exports through October as well as Trade Balance Figures.

Finally, on Friday we’ll be given an indication of the health of the property market through the release of Home Loans data.

With all 3 news releases coming out in the early hours it can be a good idea to set up automatic orders in order to take advantage of market movement outside of trading hours, especially on the larger conversions. Feel free to get in touch with your account manager do discuss your options if you wish.

Clients buying the Australian Dollar are now presented with fantastic buying opportunities. With Brexit still at play early next year, clients may wish to capatilise on these recent gains. Call us today on 01494 725 353 or email me here for a free quote.

News

Read more articles
Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.