Ongoing volatility between China and the US has been taking its toll on the AUD of late, as a commodity based currency global uncertainty leads investors away from the Aussie and into other 'safe haven' currencies such as the US Dollar. The Dollar report below looks into how this has affected AUD up until now, and how the potential upturn in Chinese exports could change this in the short term. The table below shows the difference in Australian Dollars you could have achieved when buying £200,000.00 during the high and low points of the past week.

Currency Pair% ChangeDifference on £200,000
GBP/AUD1.13%AUD$3960
Potential Reasons for AUD weakness

How will the Australian Dollar perform this week

With so much volatility in the global markets at present, commodity currencies such as the AUD have been forced lower against the majors.

The political crisis in Italy caused investors to move assets out of riskier currencies such as the AUD for much of last week. This coupled with the fears of a trade war between China and the US meant that the Aussie was out of favour with investors. as China’s largest trading partner, any bad news on this front generally speaking has a negative effect on the AUD. However, analysts predict that the Aussie’s fortunes may start to change in the up and coming weeks. The situation in Italy has meant that traders are now likely to start to reinvest into risker assets such as the AUD again.

Not only this, but the Australian economy may also surprise investors this week. According to reports, Investec have upgraded the growth figures forecasts to 0.9% for the quarter, due to be released this week, following increased investment in equipment according to the latest business reports down under.

Data and events this week

There are some key events happening both globally and domestically that could have an effect on the Australian Dollar this week.

China’s trade balance figures due to be released will be of interest to investors holding the AUD. Despite the ongoing trade war spectacle, China’s exports are due to increase significantly which could have a positive effect on the Australian Dollar, for reasons mentioned in my previous section.

Domestically, the Reserve Bank of Australia will hold their interest rate meeting in the early hours of the morning on Wednesday. Governor Lowe has made it clear that no rate hike is expected under current market conditions although the minutes released could provide some insight as to when he is likely to raise rates next, to try and keep up with the global trend of higher interest rates at present, which has kept the AUD under pressure from other currencies for some time now.

I believe that the AUD’s performance will most likely be dependant on global risk appetite as to whether an all out trade war is going to happen. Clients with an AUD requirement may want to keep a close eye on the G7 summit this week and President Donald Trump’s Twitter account for an insight.

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.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.