This morning the latest Consumer Price Index was released for Australia and came in 0.1% better than expected at 0.6%. This will come as good news for the Australian economy as they look to try and reach their 2% target.
|Currency Pair||% Change (Month)||Difference on £200,000|
After the Reserve Bank of Australia Governor Philip Lowe committed to long-term low interest rates as they look to bring the inflation level up to the 2-3% target set a few years back. The Governor could potentially be focused on a long plan that will not involve too much fiddling with the rates. In the past decades central banks that have jumped around with interest rates have seen short terms gains but consequences down the line. Lowe’s plan may appear to be to follow a wait and watch policy that shouldn’t have too many bad effects on Australian Consumers.
There are so many factors that take their toll on the Australian dollar with the likes of China and the US Federal Reserve all affecting its path. There is arguably in some cases very little that the RBA can do and really, they can only try to mitigate the exposure as much as possible.
In some good news for the economy the ASX200 which is the stock market for the top 200 Australian companies rose to a 11 year high returning to 6.8h2 points which was last seen in 2007.
The reason for the gain could be put down to the central bank cutting the interest rate with the potential of further cuts on the cards. Investors may now turn their arm to stock markets in order to beat the 1% that you can receive in interest. Over the next few months it will be interesting to see if this trend continues and could perhaps start to see more record highs towards the end of 2019. If you do have an upcoming Australian dollar trade you may wish to be in touch with your account manager.
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