Australia released their latest Unemployment rate, participation rate and employment change numbers overnight. Forecasters were suggesting that the Unemployment rate numbers would rise to 5.1% and the participation rate and employment change numbers wouldn’t excite investors. However forecasters got this prediction wrong. Unemployment numbers remained at 5% and both participation rate and employment change numbers exceeded expectation, which gave the Australian dollar a boost against sterling of approximately 0.75%.
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The housing market is something for Australian dollar sellers to be aware of. This year Australian banks have found themselves tightening lending standards due to the advice from the Royal Commission in Australia. Previously banks were failing to adequately check people's incomes and spending patterns, and the banks now appear to be paying the price.
Reports are suggesting that further tightening of lending is just around the corner and UBS has warned this could crash the Australian housing market by 30%. Since 2014 house prices in Perth have dropped by 13% and the figures are similar in other major cities. The final report from the Banking Royal Commission is to be released in February.
If it’s the case that they stipulate that banks need to tighten lending standards further I expect this will have a major impact on the Australian dollar. For clients that may have a currency requirement in the longer term, the housing market dilemma has the potential to have a major impact on your currency exchange.
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