AUD continues its rally against the Pound and Greenback which raises concerns for the RBA given its heavy reliance on exports. Learn more about GBPAUD exchange rates.

Australian Dollar Slows Down Its Gains

The Australian dollar continues to creep higher against the pound although that momentum is now slowing. Things could be turning around now. The Reserve bank of Australia (RBA) are becoming concerned about the recent strength of the Australian dollar especially as the Aussie has reached an 8 month high against the US dollar. It is fair to say that it is now overvalued.

It would be in Australia’s interest to maintain a weaker dollar to boost its export markets as the recent strength is already harming industry. This is an important consideration and my view is the Australian dollar is unlikely to strengthen much further than current levels. If anything we may see more jawboning from RBA governor Glenn Stevens to try and talk down the Aussie, something he has proved to be very good at. This may not happen overnight but some intervention seems very likely. Sellers of Australian dollars may be wise to take advantage of the attractive prices with a strong dollar.

There are no economic data releases for Australia today but there is a very full calendar next week with trade balance data, import prices and eagerly awaited inflation numbers. The Bank of Japan interest rate decision next week may also have some implications for the Australian dollar. Japan is concerned with the recent strength of the Japanese Yen so any measures introduced to combat this may have a knock on effect on the Aussie.

Now could be a great time to sell Aussie Dollars in the event the RBA take action to weaken the currency. Email me here if you have AUD to sell.

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