The Australian Dollar is showing signs of weakness as concerns mount over their Housing market and Chinas economy.

Is the Australian economy at risk?

The Australian Dollar is showing frailties of late due to factors that are largely out the Aussie’s control. Concerns over China’s economy have come into view again after a string of poor data releases. As Australia’s largest trading partner, this has caused investors to pull funds from AUD. In fact, Australia is more exposed to China now than it was Britain in the 1950’s and new models have stated that whilst the gain from being China’s largest trading partner are huge, so are the losses if China’s economy slows.

Furthermore, combine this with the prospect of the Australian housing market overheating, the good times down under could be set to come to an end. This has forced the near certain interest rate hike for the Australian economy to be postponed for now and caused the AUD to lose ground against most of its counterparts of late. In fact in the last 3 weeks, GBP/AUD rates have softened nearly 7 cents, meaning an additional AUD $16,000 on a £200,000 transfer.

What should clients with AUD expect in the coming weeks?

I am of the personal opinion that we may now start to see a window of opportunity for Australian dollar buyers, one that hasn’t been since so far in 2017. As tensions rise in the Middle East as a result of the US-Syrian conflict, I would expect investors to unwind their positions held in riskier currencies and look for safer shores such as the US Dollar.

With this in mind, in the early hours of Thursday morning the unemployment rate is set to be released which has the capability to have quite a large impact on AUD exchange rates. As this occurs outside of trading hours, it might be a good idea to get in contact with us so that we can set you a limit order or stop loss to protect you from any market volatility.


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