Sterling has found support against the Aussie Dollar in recent weeks, helped mostly by the strong economic data coming out of the UK. Will this set to continue and how will a FED interest rate change impact AUD?
The pound has made a slight comeback against the Australian Dollar of late, largely due to strong economic data from the UK after the Bank Holiday break. Early this morning, Australian Retail Sales figures showed that consumer spending was flat for the month of July, and worse than original anticipated. However, I believe that the Australian Dollar could be set for more weakness as this Friday the US will release their latest Non-Farm Payroll figures before an eagerly awaited interest decision next month.
The chances of interest rate hike in the US for the month of September were up 60% after last week’s hawkish comments for Fed Chair Lady Janet Yellen. As previously mentioned, if this figure comes in above 250,000 then the Fed will have face a lot of scrutiny if they don’t raise rates. This will likely cause investors to remove their funds from the riskier currencies such as the AUD and looks for returns in the USD. This could allow for Sterling to make further gains against the AUD by Friday.
Today, the UK will release its latest Manufacturing Purchasing Managers Index, which looks at the business conditions within the manufacturing industry. After Brexit, investors will be carefully looking at the data to tell what sort of an effect it has had on the UK economy. Of late, data releases in the UK have caused the pound to gain momentum against the AUD, will this continue today if the Manufacturing PMI’s show life in the UK after the Brexit? A small rise is expected, however if this figure deviates from what is expected then I would suggest being in contact with your broker to discuss your options.
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