With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The below table shows the difference you would have achieved in AUD when buying £200,000.00 during trading hours on Friday of last week.
|Currency Pair||% Change||Difference on £200,000|
The Australian economy has been performing well of late with strong economic data in abundance. We recently saw a release of manufacturing data which showed the highest levels since 2002. It has been a volatile time due to the recent Nuclear missile test by North Korea over Japan and Hurricane Irma with investors seeking out safe haven currencies due to the threat of conflict.
Hurricane Irma and the resignation of Fed member Stanley Fischer has caused many investors to move to the Aussie with increased risk appetite and the promise of higher returns. With strong economic data out of Australia it could be argued that an interest rate hike is on the cards.
Philip Lowe, the head of the Reserve Bank of Australia (RBA) seems nervous of the Australian Dollar becoming too strong.
Australia is heavily reliant on the Chinese buying it’s raw material, particularly iron ore. Iron ore is Australia’s biggest export and has seen a rise in value of late. If goods become too expensive due to the value of the Aussie this could force the Chinese to look elsewhere. I would imagine the RBA will attempt to talk down the value of the currency through jawboning rather than any drastic changes to monetary policy. Jawboning is a very difficult technique and savvy investors do not always take central banker’s words as gospel.
Unemployment data is released on Thursday and can change Australian Dollar value. I expect there will be a fall considering the amount of positive data coming out of Australia at present. If you have an Australian Dollar requirement I would be moving at current levels. I cannot see any grounds for a substantial Sterling rally for the foreseeable future.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.