The Pound vs Australian dollar

[John from Moneycorp]

The Aussie was full of Christmas cheer as December commenced, reaching a 6 month high against sterling. In Santa’s sack was some respectable Australian economic data, which showed stronger activity in the manufacturing sector, continuing growth in retail sales and faster growth in gross domestic product. He may as well have delivered the dovish news that the RBA would keep rates on hold until at least February, such was the positive impact it had on the currency – the GBP/AUD exchange rate was pushed to 2.0352.

 

Lurking around the corner was the Grinch in the form of ECB President Mario Draghi who, in contrast to his recent rhetoric, announced that the central bank wouldn’t be increasing the amount of money injected into the eurozone economy each month, under their quantitative easing programme. As speculation mounted in recent weeks that the bond-buying scheme would be expanded in December, investors were inclined to sell off their euros and buy commodity currencies such as the Australian dollar, for profit purposes. However, this sharp U-turn saw investors reverse their positions as the ECB under delivered. This served to more than halve the Aussies earlier gains.

 

The Australian dollar came under further downward pressure following a dramatic slump in commodity prices. Fresh signals of slowing demand from China prompted base metal prices to slide, with iron ore in particular plunging to its lowest value in a decade.

 

Positive employment figures led to a period of volatility for the currency, with GBP/AUD exchange rates shifting almost 4 cents from high to low. The official unemployment figure was expected to show a drop to 6% but the actual figure of 5.8% was healthier than expected, and helped boost market confidence in the Aussie.

One of the most widely expected decisions by a central bank in recent times, saw the US Federal Reserve raise the range of its benchmark interest rate by a quarter of a percentage point to between 0.25 per cent and 0.50 per cent. In doing so the central bank made the US the first country in the western world since the financial crisis to raise interest rates. The Australian dollar fell as low as 71.77 US cents – a loss of one cent – after the announcement, but then quickly recovered thanks to the FED’s accompanying statement about future policy, which suggested that any further rate rises were likely to be “gradual”, and dependent on the rate of inflation.

The Aussie managed to defy falls in oil prices and weakness in US stocks thanks to negative UK and US data. UK Public Sector Net Borrowing rose from £6.7 billion to £13.6 billion, surpassing the forecast £11.1 billion deficit. And the UK’s GDP forecast dropped from 2.3% to 2.1% year-on-year (YoY). Faltering US Durable Goods orders, with no growth posted for November after the rate of 2.9% in October, saw the US Dollar weaken. Consequently the Australian dollar picked up one US cent, as well as the three and a half cents it took from sterling.

 

The Aussie held steady during the stagnant holiday period, with scant economic data or events driving price action, as we bid farewell to 2015.

Looking ahead to 2016, the impact of falling commodity prices is likely to catch up with the Australian Dollar, which has so far managed to remain remarkably impervious to drops in the price of key Australian exports.

 

RBA interest rate announcements will be closely monitored, with Australia predicted to be the third modern economy, after the US and the UK, to raise interest rates – although we could see a tightening of monetary policy towards the end of the year before this occurs.

[John from Moneycorp]

Latest weekly review below, have a good weekend everyone – thanks.

 

Financial markets have not enjoyed an auspicious start to the new year.

 

A sell-off in the Shanghai stock market unnerved investors, as did the Chinese authorities' clumsy efforts to support equity prices and an 11-year low for oil. The result has been a flight to quality, with investors seeking refuge in the safe-haven currencies, including the euro and the US dollar, and offloading those related to energy and commodities. Helped by better-than-expected employment data the Australian dollar managed to dodge that bullet and it has outperformed its peers, strengthening by one and a half NZ cents. It is still down by a cent against the US dollar though.

 

Sterling, meanwhile, has been held back by evaporating hopes of higher UK interest rates and uncertainty about the looming referendum on Britain's continued EU membership. That has kept it unchanged on the week against the Aussie.

[John from Moneycorp]

Negative news for the pound today.

 

The governor of the Bank of England, Mark Carney, ruled out an immediate rise in interest rates because of the turmoil in the global economy and weaker UK growth.

[John from Moneycorp]

Australian dollar weekly review below - thanks

 

Among the major currencies sterling was the biggest loser. Even to start with, investors were none too keen on it but they really took flight when a speech by the Bank of England governor pushed back even further expectations for higher UK interest rates. The Aussie was not able to make much headway during the first part of the week but it was helped on its way by the BoE governor and again the same day by the Bank of Canada's failure to make the rate cut expected by many investors: a lower Canadian rate might have encouraged a similar move by the Reserve Bank of Australia.

 

Towards the end of the week the commodity-oriented currencies all received a boost - as did global equity prices - when the European Central Bank and the Bank of Japan both hinted at increased monetary stimulus. Overall the Aussie strengthened by four and a half cents against sterling and it added two thirds of a US cent.

[John from Moneycorp]

Australian dollar is slightly weaker today - this is due to comments that interest cuts may take place soon in Australia.

[John from Moneycorp]

The monthly currency review is below – thanks.

 

The New Year is a time for celebration and positive feelings about the future. As the saying goes, ‘Out with the old and in with the new’. Unfortunately for the Australian dollar however, it was a case of more of the same as 2016 got underway. With concerns about slowing Chinese economic growth and a slump in the price of oil continuing to weigh on investors, the Aussie came under further pressure – a trend that is likely to continue over the coming months.

 

Expectation that ongoing Chinese economic woe could trigger further interest rate cuts by the RBA to help bolster the domestic economy were tempered by the central banks governor Glenn Stevens, who stated that they will remain on hold until February at least. Interpreted as a sign of strength, this caused the Aussie to strengthen significantly against sterling.

Ongoing concerns over volatility in China and declining oil and equity prices resulted in investors seeking a flight to safety – turning to safe-haven currencies, having offloaded commodity based currencies such as the Aussie. However, buoyed by better-than-expected employment data – figures showed that unemployment remained at 5.8% against expectations of a rise to 5.9% – the Australian dollar managed to rally.

 

As hopes of a UK interest rate hike diminish and speculation surrounding the outcome of Britain's in/out EU referendum mounts, the Australian dollar has strengthened against sterling – dropping from 2.08 to 2.03.

 

Expectation of further interest rate cuts by the RBA in the near future were dealt a further blow when the Bank of Canada failed to set the tone and make a much anticipated reduction of their own – a lower Canadian rate might have encouraged a similar move by the Reserve Bank of Australia.

 

Commodity-orientated currencies and global equity prices received a welcome boost following hawkish rhetoric from the ECB and the Bank of Japan, who both hinted at further monetary stimulation. Overall the Aussie strengthened by four and a half cents against sterling – aided by a dovish tone from the BoE around a UK rate hike – and it added two thirds of a US cent.

 

With the Australian Open in full swing the ‘risky’ commodity-orientated Aussie resembled a tennis ball in the full throws of a rally, as it was batted back and forth – it was bought, sold, bought, sold and bought again. Supported by the Bank of Japans surprise decision to cut its deposit rate below zero; and mounting speculation that U.S. interest rate hikes will be made at a slower pace than originally indicated. Causing GBP/AUD rates to fall to their lowest levels since May last year.

 

Will sterling make a slight recovery as we move into February? Potentially, if the impending Australian Trade Balance and Export figures show a fall owing to the slowdown in China.

[John from Moneycorp]

Weekly currency review is below – thanks.

 

It was a good week for equities, a good week for oil and a good week for energy- and commodity-related currencies. There were no cold hard facts to justify the swing in sentiment: it was simply that investors figured that their previous bearishness had been overdone. Sterling ploughed its own lonely furrow, weakening on most fronts. In large part that was because of uncertainty created by today's European Council meeting that will allegedly decide Britain's future in the EU.

 

The Aussie did reasonably well as a result of the improved optimism among investors, strengthening by two cents against sterling and holding steady with the US dollar. Its performance was spoiled, however, by some less-than-inspiring employment data: Australia unexpectedly lost 8k jobs in January, pushing unemployment up from 5.8% to 6%.

[John from Moneycorp]

Exchange rate creeping below 1.90 now.

[John from Moneycorp]

Good (and expected) news for the UK yesterday - the central bank voted against cutting interest rates.

 

 

Gave the pound a little boost. Not a massive change in the GBP/AUD exchange rate though with the pound overall remaining weak.

[John from Moneycorp]

Recurring theme but the pound is still weak. Wasn’t helped this week with the news of the decline of Britain’s steel industry.

[John from Moneycorp]

Australian dollar monthly review is below – thanks.

 

Don’t put all your eggs in one basket, as the saying goes. In recent months the Australian economy has been learning this the hard way. Since Black Monday last August, however, Australia has been forced to diversify its trade partners away from its reliance on China, and such efforts finally appear to be bearing fruit. Good news that manifested itself in the form of positive balance of trade data, which showed exports rising and imports falling, and stronger-than-expected quarterly growth of 0.6% in Q4 2015 – dispelling much of the recent anxiety over performance following disparaging economic data releases from Beijing. Consequently the Aussie was the strongest performer amongst the major currencies in the early part of the month; picking up from where it left off at the end of February.

 

With Australian economic statistics thin on the ground the Aussie benefitted from news elsewhere: data showing a decline in American hourly wages aided its cause against the US dollar, before it strengthened against the pound, after the Bank of England governor told parliament that Britain's exit from the European Union poses "the biggest domestic risk to financial stability". It initially lost ground to the euro when the European Central Bank announced lower interest rates and increased stimulus at their March policy meeting, but soon rallied when they informed the waiting media that ‘we don’t anticipate that it will be necessary to reduce rates further’.

The Aussies recent strong run was temporarily undone by its own central bank following the release of the minutes from their most recent policy meeting, which hinted – not for the first time in recent months – that current inflation issues could lead to a cut in the Cash Rate. The repetitive nature of this rhetoric meant that losses were far from severe.

 

The Aussie managed to regain its footing thanks to America’s Federal Reserve, who implied that only two rate increases are now on the cards this year, rather than the four that were previously mentioned. Good news for all the commodity-related currencies.

It wasn’t long, however, before a combination of factors caused investors to take flight from the supposedly risky commodity-related currencies, in favour of those perceived as offering a safe haven. In an about turn the Fed wheeled out a series of regional presidents who spoke publicly of a possible rate increase in April, before the horrifying terrorist attacks in Belgium instigated a move towards risk-aversion. Having lost ground to the US dollar as a result, the Aussie managed to strengthen against sterling in the wake of the Brussels bombings, which were perceived as a catalyst to sway people toward voting to leave the EU in June – a potential scenario that has been putting the pound under significant downward pressure in 2016.

 

Just a few days later, and in stark contrast to her hawkish subordinates, Fed chairperson Janet Yellen spoke of global risks to the U.S. economy – including low oil prices and uncertainty over China – justifying a cautious approach to tightening monetary policy. The previous rhetoric around imminent rate hikes was soon forgotten and the Aussie subsequently gained one and a half US cents and added two thirds of a cent against sterling. For the year to date it is 5% higher against the US dollar and 8% higher against sterling.

 

Data emanating from China has been positive in the first quarter of this year, with Chinese firms announcing that $113bn has been spent on overseas deals so far – already just $8bn off of the total for 2015. China’s resurgence coupled with improving commodity prices has boosted the Australian economy, and this is reflected by the strength of the Aussie dollar against a basket of major currencies.

[John from Moneycorp]

Poor economic data from the UK regarding the slowing of wage growth weakened the pound yesterday.

[John from Moneycorp]

The pound a little stronger today.

 

Barack Obama's speech at the end of last week, in which he encouraged Britons to vote to stick with the European Union, has gone down well with investors. They believe it improves the Remainers' chance of success. That improvement, in turn, makes the pound somewhat less of a risky proposition.

[John from Moneycorp]

The GBP/AUD rates are starting to rise – good news if you are looking to transfer money to Australia in the near future. If you are moving within the next few months, or need to make any money transfers, it is definitely worth having a chat with us about the money transfer aspect of the move.

[John from Moneycorp]

As you can probably gauge from the exchange rate this year and my posts on this thread, we should see a lot of movement in the exchange rates in the weeks leading up to the EU referendum – therefore now is a good time to start looking into this aspect if you need to send money to or from Australia in 2016.

 

It’s worth getting set up/registered with a foreign exchange specialist company in plenty of time so you are in a position to take advantage of rates if they do start to climb towards $2 again. Registering is completely free of charge with moneycorp and puts you under no obligation to actually use us for the transfer. This means when the rate hits a good level, you can book/secure it. Otherwise, if you’re not registered when it happens you may miss the high level.

 

For example the high of today for GBP/AUD so far was 1.9839 and the low for today so far is 1.9660. This illustrates how much they rates can fluctuate even in one day and the importance of having everything in place so you can quickly act and book a rate when it does spike.

 

Even if your funds are not completely available yet, it is still worth getting it set up up a Moneycorp account and speaking with us as there are ways to book rates for a future date.

 

More information and our registration link can be found here - http://www.pomsinadelaide.com/index.php?pageid=forex

[John from Moneycorp]

Sterling spikes against the Australian dollar

 

The sterling Australian dollar rate of exchange rallied further this morning following yesterday’s impressive gains.

 

Opinion polls can hold strong influence over currency direction, so the release of the Evening Standard’s latest UK EU referendum poll result yesterday, showing 55% of respondents wanting to Remain in the EU and 37% preferring to Leave, helped boost the British pound to levels last seen back in February 2016.

 

Whilst the pound was happy to receive such a boost, the Australian dollar was languishing having fallen heavily against a rampant US dollar. The US Federal Reserve policymakers' minutes released yesterday highlighted the growing likelihood of yet another American interest rate hike to come and possibly as soon as their next meeting in June.

 

Australian jobs data released overnight saw the unemployment rate hold steady at 5.7% – a 2 ½ year low ¬– although on closer scrutiny this was slightly disappointing, as the number of jobs added was lower than forecast and was boosted by part-time positions increasing.

 

Should you have upcoming international transfers to make, please visit the Poms in Adeladaide currency homepage - http://www.pomsinadelaide.com/index.php?pageid=forex

 

To benefit from no transfer fees please ensure you mention Poms in Adelaide when contacting moneycorp.

 

Thanks

 

John

[John from Moneycorp]

Australian dollar is weaker this morning – following comments from the RBA governor Glenn Stevens.

 

Good levels to consider buying some AUD if you need to do anything in the short term.

[John from Moneycorp]

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[TD]GBP/AUD pair hits 3 month high[/TD]

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[TD]In his latest address, delivered yesterday evening, Glenn Stevens of the Reserve Bank of Australia spoke of his appetite for a weak Australian dollar, before dropping heavy hints that lower interest rates are around the corner.

 

The Aussie has fallen by more than a cent and a half since his remarks.

 

In terms of its relationship with the pound, Governor Stevens' dovish rhetoric has contributed to the GBP/AUD pair reaching its best levels since February.[/TD]

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[John from Moneycorp]

The pound is weaker against the Australian dollar.

 

 

This was following a Guardian/ICM poll which suggested public opinion has in fact moved towards the UK leaving the EU.

[John from Moneycorp]

Monthly currency review is below – thanks.

 

Doubts about the global economy, stemming from lacklustre economic data from around the world meant investors took flight from the commodity-orientated currencies in favour of the safe-haven euro, Japanese yen and US dollar as May commenced.

 

All the signs were pointing towards a possible interest rate cut Down Under in the near future, yet few investors expected one in May. In the end, however, the strength of the Australian Dollar seen over the last few months, alongside low Australian inflation data finally forced the Reserve Bank of Australia’s (RBA) hand. Consequently, the central bank succumbed to pressure and decided to cut interest rates by 0.25% to a record low 1.75%. The Aussie took an immediate four-cent bath and lost a further ground when the RBA marked down its expectations for inflation.

 

And with further interest rate cuts in the offing, investors remained wary of the Aussie. A mind-set that seemed perfectly reasonable following the release of the consumer inflation expectations figure: the nation reduced its forecast for inflation from 3.6% in April to 3.2% in May. As expectation decreases, so the chance of further dovish action from the RBA increases.

 

The Aussie gained some brief respite when the RBA dampened speculation of an imminent rate cut, before Australian employment data revealed the unemployment rate had steadied at 5.7%. The welcome data came after analysts had been expecting the Australian unemployment rate to increase to 5.8% in April. Despite this, the US dollar had the upper hand courtesy of a string of warnings from US Federal Reserve presidents that rates should go up State side in the next month or two; and the pound was given a leg up to head the field overall by EU referendum opinion polls which suggested the Remain campaign is in the ascendency.

 

The Australian economy was keeping a low profile towards the end of the month and when it did have anything of note to say, it wasn’t positive: construction output and private capital expenditure (investment) both fell by more than expected in the first quarter of 2016. Even so, the Aussie managed to maintain its level against the US dollar. It was a different story in terms of its relationship with the British pound, which was experiencing resurgence thanks to ongoing anti-Brexit sentiment in the UK. A trend in public opinion that was lent further support by the Bank of England governor when he told parliament's Treasury Committee that "a vote to leave the EU could have material [adverse] economic effects". Unsurprisingly, investors interpreted this to mean the central bank is supportive of the Remains argument and, thus, the pound.

 

Mixed ecostats towards the end of May highlighted that, in the current economic climate, investors are more inclined to punish the Aussie for failure than they are to reward it for achievement.

[John from Moneycorp]

Needless to say, it’s going to be an interesting couple of weeks. Exchange rates are likely to fluctuate a lot.

 

Pound slightly stronger this morning as some opinion polls over the weekend showed Remain back in front in the EU Referendum.

[John from Moneycorp]

The UK has voted to leave the European Union after 43 years. Leave won by 52% to 48% - the pound is significantly weaker this morning against all currencies.

[John from Moneycorp]

Pound continues to drop to new lows

 

The uncertainty generated by the prospect of life outside the European Union, following the historic Leave vote last week, has left sterling lagging a considerable way behind the other dozen most actively-traded currencies. As the dust settled over the weekend we were greeted by Chancellor George Osbourne this morning, who broke his silence on the subject when he told a news conference that the result of the referendum was “not the outcome that I wanted” but that authorities were “ready to deal with the consequences”.

 

Having lost significant ground in the immediate aftermath of Fridays events, the pound came under further pressure today as markets continue to digest the result and anticipate the next steps in the Brexit process.

[John from Moneycorp]

More stable day for the pound in that it didn't weaken massively.

[John from Moneycorp]

All eyes on the UK today.

 

There has been some speculation that the Bank of England could make the first cut to UK interest rates in more than seven years today.