Sterling has strengthened over the Australian Dollar of late, following the triggering of Article 50 and positive UK data. I am of the belief that the Australian economy could come under further pressure in the coming months. Firstly, the trade relationship between the US and China may translate into Australian dollar weakness. President Xi-Jinping and President Trump have been at odds on several issues, which if they continue could start to weigh on the Chinese economy.
The Chinese economy is heavily linked with Australia’s as China is its biggest trade partner. When China sneezes Australia often catches a cold so I would not be surprised to see Australian dollar weakness if tensions continue to mount.
Domestically, the latest interest rate decision in Australia has left investors wondering the state of the Australian economy. Phillip Lowe has mentioned that the reason that the rates were kept at a record low of 1.5% for the 12th consecutive month was due to soaring house prices, which he is determined to tackle. The Pound has now found some support levels against most major currencies since the triggering of article 50 and as trade deals become more apparent Australian dollar buyers could be looking at further gains.
For the rest of the week, I would suggest clients that have an AUD requirement to keep a close eye on the construction data which is released late Thursday evening and Foreign Investment Figures for China released over the weekend. As both data released are out of hours, I would suggest discussing the contract options we have here at Foreign Currency Direct to make sure you are well covered.
To learn more about how the information in this report could impact your Australian Dollar buying or selling requirement, email me at email@example.com or call 01494 725 353.
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