The Australian economy is showing signs of weakness, consumer confidence has dropped, and business conditions are at their lowest levels in 19 months following from last week’s low GDP release which showed a contraction from 0.6% to -0.5%.The contraction was partly due to cuts in government spending, reduced business investment and poor weather conditions putting pressure on construction. After the negative GDP release, the AUD fell by 2 cents against the Pound, making a £150,000 transfer $3,144 more expensive, and the Aussie has struggled to regain any lost ground since.
This evening at 7pm, the Federal Reserve will announce their latest US Interest Rate decision which could heavily impact Australian Dollar exchange rates. Throughout yesterday investors transferred their assets into the safe haven currency ahead of the expected Interest Rate hike, as a higher rate would mean higher returns on investment, and the Australian Dollar weakened as a result of this. Although a hike of 0.25% is widely anticipated, any change to this or suggestions of adjusting monetary policy next year could result in further Australian Dollar weakness. Clients looking to sell Australian Dollars may look to put a plan in place ahead of this release to limit themselves against any further losses. One of our Forward Contracts allows clients to secure the current rate of exchange for any time up to two years, for just a small deposit, and can limit exposure to moving currency markets.
Another potential market mover for GBP/AUD rates this week will be the Bank of England’s interest rate decision tomorrow afternoon. As the rate was last cut in August and the UK economy has proven resilient since, it is unlikely that the BoE will make any changes to policy at this meeting. However, the subsequent policy statement will be keenly watched by investors and any hints to positive future Interest Rate changes could result in a jump for GBP/AUD rates and another opportunity for Aussie buyers to capitalise on.
For more information on how todays US interest rate decision could impact your AUD buying or selling requirement, call our team on 01494 725 353 or email email@example.com and I will be happy to assist you with any of your questions.
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