On Friday, Chinas producer price index rose for the first time in nearly 5 years as well as inflation data beating market expectations after accelerating to 1.9% from the year before.
China is the world’s second largest economy, so signs that the economy is starting to perform again is welcome news for all, however even more so for the Australian economy as China is their largest trading partner. Growth for China should therefore translate into Australian Dollar strength.
The Australian dollar has performed extremely well against Sterling since the UK voted to leave the EU and there are now signs that this strength is set to continue. The Australian dollar has gained nearly 36 cents since June, meaning purchasing 200,000 AUD would cost you nearly £23,000 more today than pre-referendum.
I personally think the Australian dollar could strengthen even more in the upcoming weeks and months. If you are client looking to buy Australian dollars, then doing so before Wednesday may be a good move. A flurry of new Chinese data will be released, such as Gross Domestic Product readings and Industrial production figures for the third quarter. These are predicted to show an increase and signs that the economy is expanding, and could strengthen the AUD.
Not only are there promising signs of growth in China, but domestically the Australian economy is showing signs of strength this week too. On Thursday, the unemployment rate is expected to show a dramatic increase for September, meaning that there are more people in work and stimulating growth in the Australian economy. Clients looking at buying Australian Dollars may want to look closely at UK inflation figures and capitalize on any spikes this could potentially bring and bite the bullet to get things done before we see further strength for the Aussie later this week.
Call our trading floor today if you would like to discuss an upcoming currency transfer. Our number is 01494 725 353.
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