As the US' promised interest rates look likely to take place, the Aussie Dollar is struggling against USD as it becomes clear that the RBA aren't in a position to increase interest rate hikes any time soon. The table below shows the difference you could have achieved in USD when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
The Pound to Australian Dollar exchange rate has risen to some of the best post-Referendum rates we have had in response to increasing confidence over the UK’s Brexit position and less chance of an interest rate rise in Australia.
The RBA (Reserve Bank of Australia) are being closely monitored for their stance on interest rates. Generally speaking there is becoming less and less chance of any interest rate rises soon, which is hampering the Aussie.
Recent economic data had shown that the pace of wage growth increased which is a sign rising living standard are increasing. Previously there had been a concern rising Inflation might need to be tempered by raising interest rates, the rising wages removes that need for now.
Key data for the Australian Dollar this week is New home sales data released early Friday morning. If this figure fails to perform the Aussie may weaken, Theresa May is also giving a speech on Brexit on Friday which could trigger sterling strength. GBPAUD above 1.80 could a real possibility this week, AUD buyers might wish to consider the Limit order to ensure they don’t miss the rate.
Events in the United States are also important for the Australian Dollar this week as we have some key pieces of news that could influence the likelihood of interest rate rises in the US.
Typically, at present when the US Dollar is strong the Aussie weakens and vice versa. This behaviour has been observed since where investors previously held funds in Australian Dollars to benefit from the higher yield the currency offers, investors are now buying up US Dollars instead. As the US raise their interest rate it becomes more attractive to hold US Dollars than Australian dollars since it carries less risk.
It is no coincidence that on the day GBPAUD hit its highs this year, it was the time of the stock market turmoil in the United States. In the uncertainty that followed the Aussie was sold off and US dollars were bought to ‘hedge’ against the uncertainty.
Whilst for a slightly different reason the relationship on the USD/AUD pairing is very important for GBPAUD buyers and sellers looking to maximise their position.
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.