The Australian Dollar weakened yesterday following poor housing data for July and a sharp drop in value of business investment down under during the second quarter of the year. More on the recently released data and how this impacts the outlook for AUD for the rest of year and into 2019 in today's Australian Dollar report. The table below shows the difference in return you could have acheived when selling £200,000.00 during the high and low points during the past week.
|Currency Pair||% Change||Difference on £200,000|
The Australian Dollar has been struggling of late after China’s involvement in a trade war has had a knock-on effect on the Australian economy. The poor data releases are reflecting this and more importantly forcing the Reserve Bank of Australian to keep interest rates on hold for a record number of months. Until this improves, I’d see very little reason for investors to get excited about the AUD, keeping its value under pressure.
In fact, the data yesterday pointed to a worrying picture. The business investment figures fell by -2.5% across all categories. This points to a weaker outlook for 2019 for businesses in Australia and could keep the Australian Dollar under even more pressure moving forward.
Furthermore, the housing data released yesterday from the Australian Bureau of Statistics found that new building approvals fell by -5.2% during July, much worse than originally anticipated.
Recently, Westpac, one of Australia’s largest banks and top four mortgage lenders decided to raise its mortgage rates by 15 base points, as effective of the 19th of September. This is likely to only further dampen housing activity in Australia and could prove costly for the AUD.
On the other hand, the housing market, in particular the housing bubble as it is referred to has been a major concern for the RBA for some time. By slowing activity, they could be avoiding a housing sector crisis.
With little data out for the rest of the week now, the focus will turn to next week’s Gross Domestic Product figures. Yesterdays data sets up Wednesday’s data to be interesting. Low levels of business investment will normally drive down a countries GDP, however whether this is immediate is yet to be known. Additionally, higher mortgage rates will mean less expendable income for consumers down under which could also cause GDP to shrink. Clients with an upcoming AUD transfer may want to get in touch to discuss options that could protect you from negative data releases.
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.
It was efficient, felt very secure with the checks made along the line and a very good rate of exchange.
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