The following report looks at what is impacting the Australian Dollar, taking a look specifically at the RBA's next interest rate decision in the wake of a much stronger AUD. Will they look to cut interest rates to weaken the currency and boost exports?
Economic data in Australia released this week will give us a much clearer indication of what the likely next course of action from the RBA (Reserve Bank of Australia) will be. Financial markets have been keenly watching and trying to gauge whether the RBA’s next move will be higher or lower on interest rates. A booming property market has prompted concerns to raise interest rates to prevent a crash. Whilst a slowing jobs market and low inflation numbers suggests there is room for low rates or a cut.
Plus the Australian economy relies on it exports of many raw materials from copper to coal so a weaker currency helps boost exports.
This week is a vital one for the Australian dollar as we receive the latest Unemployment data due on Thursday morning. The Unemployment picture is fairly stable with an Unemployment rate of 5.9% but the loss of 33,500 jobs in part-time Unemployment last month shook the Aussie. More global factors which might unsettle the Aussie this week is the latest Chinese Inflation data due on Wednesday and then Trade Balance data Thursday morning. With Australia relying heavily on a strong Chinese economy to purchase their goods, this will be another factor for the RBA to consider, plus for investors to take stock of.
Whereas the general trend has favoured Australian Dollar sellers the coming weeks might actually see the currency weaker as we move to a position where we see the pound stronger. Following the recent data it appears the Australian dollar could now move into a period of weakness which would unsettle those sellers hanging on for better rates. The removal of the previous tough talk of the RBA has unsettled the Aussie ever so slightly.
With Sterling enjoying a better period and a removal of some of the worst fears we might now be about to enter a time that finally favours Australian dollars buyers who have so far in 2017 not had much to be thankful for. Australian dollar sellers looking to capitalise on spikes should remain in close contact with their account manager here to keep up to date.
Even if you don’t have full funds available now, remember for a small deposit in pounds or Australian dollars (or any other currency) you can forward fix a rate to buy or sell Australian dollars for up to one year.
It is well worth highlighting that Good Friday and Easter Monday are both public holidays across the world so this is something to note when considering timescales of being able to have cleared funds in bank accounts.
Whilst not quite at the best rates we have ever had for AUD sellers are some 40 cents (check) better than where we were prior to the Referendum. On a 100k AUD sale that makes a difference of £11,000 better off. Such improvements are unlikely to re-emerge quickly so if you have any AUD to buy or sell make sure you are in contact with us at Foreign Currency Direct on 01494 725 353.
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