With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The below table shows the difference in Australian Dollars you could have achieved in AUD when buying £200,000 at the high versus the low.
|Currency Pair||% Change||Difference on £200,000|
The Australian Dollar looks set for a volatile period amidst all the global uncertainty which suddenly materialised when the US stock market spectacular crashed by 4.6% on Monday.
The Australian stock market also suffered major falls, all of which helped see the Aussie weaken against most of the major currencies. The Australian Dollar, which is regarded as a commodity currency is heavily impacted by world events and triggers like this financial crash can see the Aussie come under considerable pressure. As risk appetite drops it is normally the commodity currencies which tend to slide lower and this is exactly what is happening now.
GBP AUD rates surged again yesterday after the Bank of England meeting which raised the prospect of higher UK interest rates.
The future of the Aussie will also be impacted by what happens with interest rate policy in the US. There are concerns which have been led by the US Federal Reserve that interest rates may need to rise faster than initially expected. This is also one of the reasons for this week’s market turmoil as there is a belief that inflation will now begin to push much higher resulting in higher interest rates in the US and across the globe which could start to cool global growth. This isn’t good news for the Aussie and clients looking to buy Australian Dollars could see additional gains with a move higher to 1.80 for the GBP AUD pair.
Although concerns over the recent volatility in the financial markets have been raised, the understanding from the Reserve Bank of Australia is that it will take a balanced view and see what happens as it is still possible that this may be something of a short term shock. Clients looking to sell Australian Dollars could see a better time to buy pounds if calm is restored to the financial markets and things settle down in the US.
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.