It’s been a difficult week for the Aussie dollar, with the currency falling to its lowest level all month against the pound and its lowest level in 2-months against the US dollar. The sell-off of AUD has pushed the GBP/AUD rate to within 4-cents from its annual highs, which are almost the highest levels seen in 34-months.
|Currency Pair||% Change (Month)||Difference on £200,000|
The Reserve Bank of Australia (RBA) has been toying with the idea of cutting rates for some time owing to a cooling economy down under, but the RBA has been loath to make the change due to concerns it could have on the overheating property market especially on the East coast of the country. This week’s disappointing inflation data, in the form of consumer price index (CPI) figures, sparked the sell-off as markets now strongly believe there could be interest rate cuts from the RBA due to the stagnant inflation.
Aussie inflation levels have been below the RBA’s 2-3% target for 3-years now, and this week’s reading was the lowest reported in the past 16-years which explains why financial markets now consider at least one cut this year.
Those of our clients monitoring the AUD’s value should be aware that the expectation for a cut is outlined for June, with many expecting another before the end of the year.
The next key release for the Aussie dollar is likely to be next Thursday’s Chinese Manufacturing PMI release. This will cover the outlook and sentiments within the country from a number of key private manufacturing companies, and it’s important for the Australian outlook due to the interconnectedness of Australia’s economy with China.
If you would like to plan around this release, please feel free to register your interest with us as the release could result in large movements outside of hours as with this week’s inflation data release.
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