This Australian Dollar update discusses some of the factors that are likely to affect AUD exchange rates today.
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The Australian Dollar could now be in for a very volatile period after the US Federal Reserve raised interest rates this week to 1.5%. The direction of the Aussie will now be heavily determined by the future path of interest rate hikes in the US. As rates push higher in the US then this is likely to have a negative impact on the Aussie Dollar as investment moves towards the US, especially considering that interest rates both in the US and down under are now level pegging at 1.5%.
It does not happen often where rates in the US are higher than in Australia and the last time this happened was between 1997 and 2001 when the Aussie struggled.
The commentary coming from the Reserve Bank of Australia has become ever so slightly more hawkish but still not enough to warrant a rate increase yet although more positive data from Australia could see things change quickly. Another three rate rises are expected in the US throughout 2018 and when combined with a grand infrastructure spending plan from President Trump then this could put additional pressure on the Aussie.
The Australian Dollar has been boosted by better employment data which arrived considerably stronger than expected. Although unemployment remained steady at 5.4%, it was the change in employment which surprised the markets. Official data from the Australian Bureau of Statistics saw employment jump higher by 61,600 which is the largest increase since October 2015.
Clients looking to buy or sell Australian Dollars with pounds are likely see considerable volatility today after the EU summit is wrapped up. A positive outcome for the UK which has a positive twist on the negotiations is likely to be received very well for the Pound and there could be some good opportunities for buying Dollars. A move back towards 1.80 for GBP AUD does not seem out of the question with a healthier looking pound and a weaker outlook on the Dollar.
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.