Australian Dollar and the US

Once again, Trump’s Presidency will be impacting the currency markets. There are two key areas where this is expected to track on the value of the Australian Dollar in general, not just against its US counterpart, but against the likes of the Pound as well. Firstly, Trump has threatened to rip up the Trans Pacific Partnership as soon as he takes office. This was a trade agreement set to bring together major economies around the Pacific in a trade agreement between themselves and the US, where all were expected to thrive.

This underpinned much of the recent confidence in the Australian economy after concerns last year when China, its major trading partner, was showing signs of buckling. Having such a pillar of the Dollar’s value removed could seriously weaken the Dollar, and this could happen as early as February if this is near the top of Trump’s to-do-list. Again, his vague and headline grabbing rhetoric is given little away on exact dates.

Will another US interest rate hike hurt the Australian Dollar?

The short answer is that it’s more than likely. Janet Yellen, the head of the FED, is expecting three further interest hikes to compliment the one earlier this month. This should undercut the Australian Dollar’s value as investors sell off the AUD to seek better, more stable returns with its US counterpart.

Trump is certainly advocating more hikes, however, Yellen announced that there would be four interest rate hikes this year, and there has only been one.

Again, with so much of the Australian Dollar’s value seemingly dependent on the whims of the incoming President, it is best to position yourself to be ready to move quickly with any planned transfers, in order to avoid being ‘last to the party’ with any opportunities which emerge, and to protect yourself from any adverse downturns, whether you are buying Australian Dollars, or selling them.

Call our trading floor today on 01494 725 353, so that one of our knowledgeable brokers can talk you through the various options available to you, as well as assisting you in making an informed decision.

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