The Aussie Dollar made gains last week against the the US Dollar and Sterling, due to the recent volatility in the USD, encouraging investors to move their funds to AUD rather than USD for high returns. The below table shows the difference in AUD you could have achieved when buying £200,000.00 during the high and low points of the past 30 days.
|Currency Pair||% Change||Difference on £200,000|
At the back end of last week, the Australian Dollar rallied against most G10 currencies, including sterling and the US Dollar. The reason for the surge was that the weak US wage growth report cast a doubt that the US will not raise interest rates on March 21st. Furthermore, Donald Trump and ‘trade wars’ is also putting pressure on the US Dollar and it appears that the Australian Dollar benefited last week.
Regular readers will be aware that many currency speculators use the Australian Dollar as a way to receive high interest and therefore make higher returns on their yields. If the US Dollar experiences a period of volatility we can see currency speculators move away from the US Dollar and enter the Australian Dollar. However, if US interest rates are hiked in March US interest rates will be higher than Australian interest rates and this would be the first time in many years. My personal opinion is that it’s extremely likely the FED will raise interest rates and therefore if I were selling Australian Dollars, I would look to take advantage of the recent spike.
Overnight Australia released their latest Home Loans and investment lending for homes numbers for January. The consensus was for home loans to be released at -0.1% and Investment lending for homes to be released at 2.3%. Both figures were released below expectation.
In addition, the National Australian Banks business confidence and conditions numbers were also released this morning. Business conditions showed a slight improvement. In regards to Australian dollar exchange rates the data releases have appeared to have counteracted one another.
The next key data releases to look out for this week are New Motor Vehicle sales, Consumer inflation expectations and the RBA bulletin, which are all released in the early hours of Thursday morning. As the releases are outside of trading hours, for client’s that are buying or selling Australian Dollar short term, the use of a limit order, which allows us to buy currency on your behalf at a predetermined rate. This is done by our automated computer systems. For more information please feel free to call the trading floor or email me directly at email@example.com.
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