The Australian economy could be set to suffer from the US-China trade war, as the largest exporter of Australian raw materials, with the high tariffs imposed on China and the knock on effect this could have on the economy, Australia could see the goods purchased reduced. The table below shows the difference in AUD you could have achieved when buying £200,000.00 during the high and low points on Tuesday.
|Currency Pair||% Change||Difference on £200,000|
The pound has lost significant ground against the Aussie of late. It was only recently GBP/AUD was approaching 1.85.
I am of the opinion this is predominantly due to Sterling weakness. A host of poor data and the consequential very bleak monetary policy outlook has hit Sterling hard, not to mention the lack of clarity surrounding Brexit.
Unfortunately I see little chance of gains for the Pound based on positive news from the UK economy. There could be some form of hope for Aussie buyers in the form of the on-going trade war between the US and China.
Australia is heavily reliant on China purchasing it’s raw materials, particularly iron ore. The heavy tariffs that the US is threatening China with would be sure to heavily impact Chinese growth and in turn the Australian economy as raw material demand would fall and in turn prices.
If you have a trade involving purchasing Australian Dollars it would be a wise to stay in touch with your broker if there is an improvement for Sterling it may not be for long considering the fragility of the pound.
There is little data of consequence coming from down under during today’s trading so attention turns to retail sales on Monday.
Retail sales has been a cause for concern for the Australian economy for some time. The increase in living costs in high wage growth areas such as Melbourne and Sydney has caused depletion on the purchase of luxury goods. The Australian economy has suffered as a result.
The data release will be key to the Reserve Bank of Australia’s (RBA) decision on future monetary policy change, a rise would in figures from last month would result in further Australian Dollar strength.
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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