Disappointing data sets Australian Dollar on negative trend

It has been a difficult week for the Aussie Dollar which has lost considerable ground against the Pound due to raft of heavy negative economic releases. Monday’s minutes highlighted the Reserve Bank of Australia’s concerns over the Housing market with household debt said to be rising faster than avg household income. This was further compounded by a consecutive three week fall in consumer confidence within the Australian economy reported by the ANZ-Roy Morgan index. Both set the Aussie on a negative trend which coupled by overall strength from the Pound allowed GBP/AUD rates to soar by almost 3% over the course of the week, making a $200,000 transfer, £3,500 cheaper.

Chinese trade deals key to long term AUD strength

With over 32% of all Australian exports going to China it is evident that any faciliatory agreement to encourage trade between the two countries is going to support long-term growth within the economy, stimulating demand in the currency as a result. It is now expected that Australia and China are to sign an agreement on beef exports during Chinese Premier Li Kagwang’s visit this weekend.

Meat exports to China already provides more than 8 Billion A$ to the Australian economy. But following the scandalous claims coming out of the world’s n1 meat exporter Brazil earlier this week, the government have sensed an opportunity to increase their market share. If Australia can prove they can up their production to match China’s needs then this deal could well trigger long-term AUD strength as a result.

Short term opportunities for AUD buyers

At the other end of the spectrum, Chinese demand for Australia’s primary export Iron Ore has been put into doubt. Despite record breaking monthly imports of 83 million tonnes projected to hit Chinese docks for march, the concern is that Chinese reserve piles will hit full capacity and future demand for the commodity will drop. Currently they are projected to rise to 131 million tonnes by the end of the month, up from 119 million tonnes at the start of the year. Chinese manufacturing data is due to be released next Friday and could present short term buying opportunities as a result.

For further news and forecasts around the Australian Dollar, speak to a member of our team on 01494 725 353. Alternatively, you can email me directly at bts@currencies.co.uk and Ill be happy to reply personally.

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