The RBA has decided to once again leave interest rates at 1.5%, as economic data including wage growth and housing market slows. This report discusses the affects this is currently having on AUD. The table below shows the difference in AUD you could have achieved when buying £200,000.00 during the last 30 days.
|Currency Pair||% Change||Difference on £200,000|
Arguably since the credit crunch over 10 years ago, the Australian dollar has benefited from investors purchasing Australian dollars due to the higher yields on interest rates, however in recent months the yield advantage appears to be evaporating as the US continues to hike interest rates. This morning the Reserve Bank of Australia released their latest interest rate decision, and no surprises Australian interest rates remained on hold at 1.5%.
The Governor of the Reserve Bank of Australia explained that sluggish wage growth numbers and a slowing housing market contributed to the decision. Property prices have been softening since the start of the year with annual price growing at 0.7%, arguably because of the steep declines in Sydney and Melbourne. If the Reserve Bank of Australia hiked interest rates this would put further pressure on a struggling property market down under and therefore the amount of people buying new homes.
GBPAUD exchange rates have broken through 1.80 which has been a key psychological barrier for clients purchasing Australian dollars with pounds. I personally believe the pound is going to come under pressure due to Brexit negotiations and offshore carry traders will continue to sell off their Australian dollar positions due to the higher returns elsewhere, therefore both currencies could come under pressure in the upcoming weeks. The question is which currency will devalue more than the other? Over the last 18 months, Brexit negotiations have had a major influence on all sterling currency pairs, therefore if I were buying Australian dollars I would take advantage of the recent spike above 1.80.
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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