The pound to Australian dollar interbank exchange rate has risen this week. In part, this may be because opposition MPs passed their bill blocking a ‘No Deal’ Brexit, the UK’s strong economic data, and also, because of signs that Australian businesses and consumers have grown more pessimistic.
To begin with, according to NAB’s monthly Business Confidence survey this Tuesday 10th September, company sentiment Down Under fell to +1 in August, from +4 in July.
Meanwhile, Westpac’s poll of Consumer Confidence for September 2019 fell to -1.7%, from August’s upbeat +3.7%. So as businesses and consumers feel more downbeat, this may slow Australia’s GDP growth.
Last Thursday 6th September Australia’s trade surplus unexpectedly shrank in July, to AU$7,268 million. This was below economists’ predictions for AU$7,400 million, as well as June’s result of AU$7,977 million.
In part, this could be because Australia’s exports grew by just 1.0% in July, below June’s 1.4%, while Australia’s exports rose by a sharper 3.0% in July.
Given that Australia businesses and households may feel less confident, and other recent signs of economic weakness Down Under, it’s thought that the Reserve Bank of Australia (RBA) could cut interest rates further later this year.
Already, the RBA has cut twice in 2019, to an all-time low of 1.00%. In fact, it’s even rumoured that the RBA could begin QE too, which could affect the Australian dollar.
The Australian dollar was on the back foot this week, as Australia’s economic growth disappointed in Q3, from July to September. As a result, the Reserve Bank of Australia looks increasingly set to cut interest rates further in 2020.
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