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 £200,000.00 at the low and high levels during trading on Friday 24th.
|Currency Pair||% Change||Difference on £200,000|
The situation down under is worrying at present. Recent retail sales figures showed the biggest decline in figures for over four years. Weak wage growth is clearly having an impact. Consumers are clearly counting their pennies. The bureau of statistics shows that Australian’s are spending less on retail and spending more of their income on expenses like education, rent and utilities.
From 1990 to 2007 retail trade was growing on average by over 5.7% per year. The latest figures showed growth of a meagre 2%. The biggest change in spending appears to be housing which is very worrying considering the property price bubble surrounding high wage growth areas such as Melbourne and Sydney.
The Reserve Bank of Australia (RBA) have stated they intend to keep interest rates on hold for the foreseeable future due to the current state of the Australian economy. The heavy reliance on the Chinese for exports is becoming a burden and other areas of Australian industry need to expand to fill the economic void left by China’s slowing growth.
The United States Federal Reserve (FED) is set to raise rates at the next FED Interest Rate decision on 13th December. Many investors have their money in the Aussie due to the relatively high interest rate, however if the US raise rates the US will be on par with Australia in terms of return. With the US considered a safe haven they will leave for the increased safety of the US dollar. Although the hike will be factored into current exchange rates to some extent this should be considered a as another factor that could cause potential Australian Dollar weakness.
If you are an Australian Dollar seller, buying Sterling it may be wise to move at current levels despite the lack of clarity on Brexit and the political uncertainty in the UK.
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