It’s been a volatile week for the Aussie Dollar since Monday as we’ve seen the GBP/AUD rate fluctuate dramatically, mostly owing to issues outside of Australia.
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As Australia is an export driven economy to an extent, and its biggest trading partner is China we’ve seen sentiment surrounding the heath of the economy moving forward swing this week. This is because over the past weekend Chinese President, Xi Jinping and US President, Donald Trump appeared to put their differences aside as previously discussed in the USD section. This pushed global equities as well as commodity currencies such as AUD higher and AUD/GBP hit its highest level since early January.
The mood has since changed unfortunately for Aussie Dollar sellers, as news of the arrest of the CFO of a Chinese Telecoms giant (Huawei) in Canada over breaching US Iranian sanctions have spooked the markets. Analysts now expect to see US-China relations deteriorate and we’re witnessing the negative knock-on effects this is having on the likes of AUD.
In just 48-hours this week the AUD/GBP pair dropped almost 3% which goes to show how sensitive AUD is to global affairs.
Those of our readers hoping for a return to the trade levels seen earlier this week may have to look to next Tuesday’s vote in the houses of parliament. If UK PM, May can’t get the support she needs we may see GBP weaken which could benefit the AUD/GBP rate. This would of course depend on the GBP weakness being greater than that of AUD which is clearly under pressure at the moment.
Although there are no major data releases out of Australia until next week, over the weekend there will be a number of releases out of China that could impact exchange rates. These include Trade Balance figures along with Import and Export data so do make us aware of any currency exchanges you would like to plan around the weekend and next week’s releases.
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