In recent the weeks the Australian Dollar has been losing momentum against sterling and the US Dollar. AUDGBP currently sits at a 4 week low and AUDUSD at a 12 month low. Many of my clients have asked whether a change of fortune is on the horizon for the Australian Dollar or if further losses are expected? I've looked into these issues further in the Aussie Dollar report below to explain some of the reasoning behind AUD's losses.
|Currency Pair||% Change||Difference on £200,000|
The Australian dollar outlook in my opinion has gone from bad to worse and I expect a further decline in the upcoming months due to the trade war between Australia’s most important trade partner China and Australia largest defence ally, the US. Australia are stuck between a rock and a hard place and therefore have little influence on the two leading economies, which in turn could have a major impact on the Australian exports as growth in China stalls. Short term you would expect commodity prices such as iron ore and coal to fall and as we report regularly commodities such as Iron ore and Coal have a major influence on Australian dollar exchange rates.
Also, Australian inflation remains stagnant, and poor wage growth numbers coupled with high debt levels for households, has forced the Reserve Bank of Australia to leave interest rates at record lows of 1.5% for the last 2 years. With the US continuing to state that further interest rate hikes are on the horizon, it’s hard to find a reason at present of why the Australian dollar is going to recover any of the losses seen in the last 12 months against the US dollar, as I wouldn’t be surprised to see investors continue to sell off their Australian dollar positions and enter the US as the US dollar pays the highest return out of the G10 currencies at present.
If you purchasing Australian dollars and have a short amount of time I would recommend the use of a limit order. This allows you to target a rate and once that level is achieved we will buy your currency on your behalf, 24 hours a day.
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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