This Australian Dollar report will address the factors that could have an effect on exchange rates over the coming weeks. The table below looks at the difference between the rate you would have achieved when purchasing AUD at the low and high levels during trading hours yesterday.
|Currency Pair||% Change||Difference on £200,000|
The Australian Dollar has weakened after Australian Gross Domestic Product (GDP) released yesterday arrived considerably lower than forecast. Australian GDP slipped to 0.6% for the third quarter which was substantially lower than the 0.9% recorded the previous quarter. At these kind of levels the economic growth being seen down under is still strong but the weaker numbers will give cause for concern at the RBA as it doesn’t want to see a downward turn in the economy. Consumer spending in Australia has also disappointed the markets having grown at the slowest pace since the 2008 financial crisis.
The outlook for interest rates is less clear at present especially after yesterday’s Australian GDP numbers and this is likely to fuel a volatile period for the Aussie Dollar.
Although the Reserve Bank of Australia held interest rates at 1.5% this week the Australian Dollar did receive a small boost after the tone from the central bank has become slightly more hawkish in its approach to monetary policy. The central bank also now appears to be less concerned with the strength of the Dollar, something it has regularly cited as an issue.
RBA Governor Philip Lowe has previously made clear that there are unlikely to be any interest rate hikes in the near future although this week’s meeting would suggest that there is an acknowledgement that interest rates will need to rise next year with the markets starting to prepare for the prospect of a rate rise in the first half of 2018. The weak GDP however could be enough to change that view going forward and a rally to 1.80 has now been brought into question. A move back below 1.75 for GBP AUD seems the more likely direction of travel.
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