Brexit will be the key market mover for GBP/AUD rates over the coming weeks, however I think the Pound will fair better against the Australian Dollar than other major currencies. Read on for insight into the global factors impacting Aussie Dollar exchange rates currently.
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Australia is heavily reliant on China purchasing it’s exports, particularly raw materials. Iron ore is Australia’s largest export so it is worth keeping an eye on Iron Ore price as it can influence Australian Dollar value. The ongoing trade war is a threat to Australian Dollar value as the tariffs being placed on China by the US will no doubt impact Chinese growth. China has vowed to match the US, Dollar for Dollar on tariffs. As the trade war escalates, investors will move away from riskier commodity based currencies such as the Australian Dollar, in search of safe haven investments.
Australia also has concerns over consumer spending. High wage growth areas such as Melbourne and Sydney are proving very popular places to set up shop, and property prices are well above the average for the country.
With living expenses so high, Australians are being forced to move away from purchasing luxury goods, forced instead to spend their hard earned money on living expenses. Keep a close eye on Retail sales data this month as this can influence Australian Dollar value.
During the early hours of tomorrow morning we will see the Reserve Bank of Australia (RBA) interest rate decision. Rates are expected to remain held at 1.5%.
What will be interesting however is the RBA statement where the RBA will provide justification for their decision, but also could hint at monetary policy changes moving forward. If there is an indication that a hike could be on the agenda this will be positive news for the Australian Dollar and we could witness Aussie Dollar strength.
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