This Australian Dollar update discusses what could impact exchange rates in the coming weeks. The table below shows the movement in GBP/AUD last Friday and the difference you would have received when buying £200,000 at the high compared to the low.

Currency Pair% ChangeDifference on £200,000
GBP/AUD0.976%AUD $3380

China’s Credit Rating Downgraded

Australia is heavily reliant on the Chinese purchasing their services and goods, it makes up a substantial proportion of Australian GDP. Although Chinese growth is still impressive it is not growing at the same rapid rate as it was before. This is causing the Australian dollar to weaken. It would have had a bigger impact on GBP/AUD if it was not for the weakness of Sterling created by the political uncertainty surrounding the UK general election. You can gauge the slip in China’s growth by the fall in the price of Iron ore, Australia’s biggest export and it’s price has plummeted of late due to the drop in demand.

Personally I am slightly dubious of figures from China, rumours have been circulating for years of shadow banking and data manipulation. I think the Chinese economy is not as strong as some believe. This does not bode well for the Australian Dollar.

AUD has recently been hit by Moody’s credit rating downgrade of China due to the country’s high levels of general indebtedness. Should China’s slow down continue I would expect the Australian Dollar to drop further.

RBA Interest Rate Decision, GDP and Trade Balance data make for a busy week down under

It would be wise to keep an eye on next week’s data releases so you can see the impact on the Australian economy. Tomorrow we have the Reserve Bank of Australia (RBA) interest rate decision, despite the concerns around the Australian economy I would be surprised to see any rash moves from the RBA. It is however worth keeping an eye on the RBA rate statement. This could give an indication to future changes in Australian monetary policy.

Wednesday will see the release of Australian GDP figures and Thursday we will see trade balance data. Both releases come through during the early hours, so if you are looking to trade short term, limit orders may be the way to go. A limit order allows you to set a target rate of exchange and should that level become available your purchase will be made automatically 24 hours a day.

Please do get in touch if you would like further information on the various contract options available, you can speak with any of our currency brokers by calling 01494 725353, or email me at dcj@currencies.co.uk.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.