What are the key events affecting the Australian Dollar right now?

The Aussie Dollar has been one of the biggest benefactors of Sterling weakness this year, with the Aussie’s value gaining by over 20% vs the Pound over the past 52 weeks.

That’s an additional £25,844 on a AUD 200,000 repatriation between now and November last year, making the importance of clients timings all the more important when currencies are fluctuating at such high levels.

Those holding Aussie Dollars in the hope that the Pound will continue to decline should pay attention to a number of issues that could dent those profits, some of which I’ll attempt to cover now.

Immediately after England’s High Court decision regarding Article 50, the Government lodged an appeal with the Supreme Court to have the decision overturned. When the High Court’s decision was initially announced the Pound spiked upward, and I’m expecting the Pound to jump in value once again if the Governments appeal is blocked.

I also think that the Aussie will weaken towards the end of the year as that’s when the US FED is likely to hike US interest rates again. Should they do so I expect funds from the high yielding Aussie Dollar to be switched into the US Dollar, which will bring down the Aussie Dollars value as investors no longer need to rely on risker assets for a return on their holdings.

The US election outcome is difficult to call, but a Clinton victory in my opinion will result in some Aussie Dollar weakness due to the likelihood of a FED rate hike but whether that will translate into Sterling strength vs the Aussie remains to be seen.

Consumer Inflation Expectations to take centre stage this week

This week’s key news release down under is likely to be the outcome of the Melbourne Institutes consumer expectations for the next 12 months. The higher the expectations the more likely that there will be an interest rate hike by the Reserve Bank of Australia.

If you would like to discuss this event along with any others due out this week, feel free to get in touch with me directly at jxw@currencies.co.uk.

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