The Pound vs Australian dollar

[Keith & Linda]

This will always be a difficult one to answer and been talked about many times on this forum, but really in the end you will have to transfer money whether by necessity or by choice, the latter is usually the one where you could kick yourself for not doing it either earlier or later, so really you need to be content with the decision you make at the time. There are many so called experts in the financial field, but they are just like the weather men really! telling you this or that is going to happen but they are only predicting they have no control over it.

Have a good Christmas and enjoy your flights and new life in OZ next year.

[John from Moneycorp]

Please see a monthly review on the Australia dollar below – thanks.

 

After a mediocre run the previous month the Aussie excelled itself in October. It rose by nearly four cents against the British pound - more than 2% - and by half that much against the US dollar and the euro. Among the top dozen most actively-traded currencies the Australian dollar was the top performer.

 

It all came down to interest rates. Other things being equal, investors prefer to put their money into the currencies with the highest interest rates (proportional to inflation) because by doing so they get the highest return. There had been concern that the Reserve Bank of Australia was inclined to lower its Cash Rate, which sets the benchmark for the rate paid to bank depositors, but the RBA set those worries to rest with its monthly statement in early October. Rates were not about to go down.

 

The US Congress also helped things along for the Aussie, in a backhanded sort of way, when a power struggle there resulted in spending cuts which shut down part of the federal government for half the month. Because of the negative impact of that on the US economy investors assumed America's central bank, the Federal Reserve, would delay the wind-down of its economic stimulus. Were it to do so the Fed would continue churning out $85bn a month of newly-printed money. Some of that would find its way directly into the higher-yielding Aussie and some would help increase Chinese demand for Australia's coal and iron ore exports.

 

If the Americans helped the Australian dollar higher by accident the Chinese knocked it back with similarly little malice aforethought. When the Beijing authorities decided to dampen their potentially runaway economy by squeezing short term interest rate higher they also scared investors away from Far Eastern stock markets and the NZ and Australian dollars. The logic for investors was that a dampened Chinese economy would have less appetite for Australia's exports and so less demand for the AUD.

 

Despite that setback the Aussie still managed to beat every other currency on the block in October. Whether it can do so again in November will depend to some extent on the United States. If the Federal Reserve decides to extend its money-printing stimulus it will improve the Aussie's prospects.

[John from Moneycorp]

The Australian dollar has weakened against the pound.

 

Why?

 

Growth figures from the US led to speculation that the US Federal Reserve could start tapering its stimulus program sooner rather than later.

 

Reserve Bank of Australia lowered its GDP projection.

[guspjmh]

Just transferred about a third of my pounds into dollars. Hoping things will keep going strong, and I can transfer the rest maybe after we get there in January!

[Guest taffs]

Well done gus, Com bank offering 1.72 today. Ive just done the same.

[guspjmh]

I used a UK based FX company, who are trading at $1.7196 right now - were there any charges with Comm bank, and I assume you have to have an account with them, as mine's with NAB?

[coastie]

Moneycorp 1.68

[Keith & Linda]

Moneycorp 1.68

 

Don't be too sad there might be still some bank fees from one or both the sending and receiving banks, you may not find out until you check the statements from the receiving bank, making Moneycorp favourable maybe!

[John from Moneycorp]

The latest currency review is below, thanks.

The antipodean duo headed in opposite directions, the Aussie losing ground while the Kiwi dollar moved higher.

The Australian dollar lost a cent to sterling but gained a quarter of a cent against the US dollar.

It was saved from a worse fate by Janet Yellen, the nominee for chairmanship of America's central bank in the new year, who expressed support for the Bank's bond purchase programme which involves printing US$85bn every month.

Last week, the Australian economic data were of no help to the Aussie. Mortgage lending in September grew by no more than was necessary to cancel out the previous month's fall. Vehicle sales were down, as were consumer and business confidence in Australia.

[John from Moneycorp]

The Australian dollar continues to weaken against the pound.

 

Why?

 

- IMF comments yesterday that the Aussie dollar was 10% overvalued

 

- RBA comments open to another interst rate cut in Australia

 

- “Risk off” sentiment continues – negative news from eurozone

[John from Moneycorp]

The Australian dollar continues to weaken against the pound.

 

Why is the Australian dollar on a downward spiral at the moment?

Comments from Reserve Bank Governor Glenn Stevens saying Australian dollar remains "uncomfortably high".

 

News from the US - meeting minutes revealed US Federal Reserve policymakers expect to begin tapering economic stimulus ‘in coming months’.

 

China - disappointing manufacturing data released. China is Australia’s largest trade partner so any news like this can impact the Aussie dollar.

[John from Moneycorp]

Australia's cricket team had a far better week than its currency. The Aussie dollar was by far the worst performer, losing three cents to the euro, five cents to the US dollar and six to sterling.

 

With no useful Australian economic data to guide them, investors had to rely on the central bankers to give them direction. They got plenty, from the minutes of policy meetings at the Reserve Bank of Australia and the US Federal Reserve and from the mouth of RBA Governor Glen Stevens. The Federal Reserve offered a reminder that its money-printing stimulus programme would begin to wind down "in coming months", thus turning off the money tap that has been so helpful to the Aussie. Governor Stevens said he had "an open mind" about using intervention to weaken his currency, suggesting that the RBA might actually go ahead with it.

[John from Moneycorp]

The Australian dollar is still under pressure against the pound – this is good news for those transferring money from the UK to Australia.

 

One of the main reasons for this is after the Reserve Bank of Australia (RBA) kept its Cash Rate benchmark unchanged at 2.5% - further to the announcement, the RBA said in their statement that "the Australian dollar... is still uncomfortably high".

[John from Moneycorp]

Confidence in the UK’s economic recovery gathered momentum today as the Purchasing Managers Index (PMI) – focusing on activity levels within the construction sector in the UK – hit its fastest pace of growth since August 2007. Residential construction drove the surge with November’s survey result at 62.6, up from Octobers 59.4 (any figure above 50 indicates expansion).

 

The previous day’s PMI release from UK manufacturers had already given sterling a boost, having seen its index climb to 58.4, representing the highest level since February 2011.

 

Tomorrow sees the turn of the services sector, which will likely hold more sway of the pounds performance.

 

Sterling’s continued recent strength has seen it pass through a number of significant levels and a 3 year high against the Australian dollar.

 

It is certainly worth looking at any currency requirements you have on the back of these movements – if you are sending money to or from Australia, you can visit the Poms in Oz currency zone for more information - http://moneytransfer.pomsinoz.com/save-money-with-moneycorp.html

[John from Moneycorp]

The latest Australian dollar review is below – thanks

 

Life was not as difficult for the Australian dollar as it had been the previous week but it was no success story. The Aussie lost half a cent to sterling. Half a cent to the US dollar and two cents to the euro.

 

Some of the Australian economic data were decent enough. Retail sales were up by a monthly 0.5% in November. Activity in the construction sector grew more quickly and in the services sector it shrank more slowly. Companies' pre-tax profits averaged 3.9% in the third quarter, up from 0.4% in the previous three months.

 

But the figures for third quarter gross domestic product were disappointing. Quarterly growth slowed to 0.6% when it should have accelerated to 0.8%. As usual, the Reserve Bank of Australia was the Aussie's biggest handicap. The RBA said in its monthly statement that "the Australian dollar... is still uncomfortably high".

Edited December 9, 2013 by John from Moneycorp

[John from Moneycorp]

Latest Aussie dollar update is below - thanks.

 

A bad week for the Aussie saw it relegated to the bottom of the major currency league. It lost two cents to the pound, a cent and a quarter to the US dollar and a cent and three quarters to the euro.

 

The Australian economic statistics were not as awful as the dollar's decline suggested but they were not great. Mortgage lending continued to rise. Business and consumer confidence faded slightly. A 21k increase in employment and a swing from part-time to full-time working was spoiled by a rise in the rate of unemployment to 5.8%.

 

But the Reserve Bank of Australia was at it again. Governor Glenn Stevens continued his crusade to weaken the currency, this time telling the Australian Financial Review that he would like to see the Aussie closer to 85 US cents, 5% below its level at the time.

[John from Moneycorp]

Latest Australian dollar review is below, thanks.

 

It was not a particularly difficult week for the Aussie but it could do no better than heading up a bunch of middle-ranking currencies that also included the Canadian dollar and the euro.

 

The Australian dollar was fractionally lower against the US dollar and fell by nearly a cent against the pound.

Reserve Bank of Australia Governor Glenn Stevens was banging the drum of an overvalued currency as usual but in his testimony to parliament's Standing Committee on Economics he appeared to distance himself from the view, saying "The Bank [rather than he himself] has described the exchange rate as 'uncomfortably high'".

 

But the main problems for the Aussie were strong employment data from Britain and the US Federal Reserve's surprise announcement that it would scale back its money-printing stimulus. The pound and the US dollar moved higher in response to the news and the Australian dollar was left behind with the other also-rans.

[thearmchairdetective]

Thanks John

[John from Moneycorp]

Hi all, please find the latest Australian dollar update below – thanks.

 

Together with the other "commodity" dollars - the Loonie and the Kiwi - the Aussie lost ground to all the major currencies. It fell by a cent against the US dollar and by three and a quarter cents against sterling.

 

Inevitably the two-day holiday denied currencies much of the action they might otherwise have seen. A fractured three-day week, in which half the usual participants were off work and the other half wished they were, left scope for little more than random exchange rate movements.

 

There were no Australian economic data to offer them any guidance. Things should start to get going again on Thursday, when the manufacturing sector purchasing managers' index reading reminds investors that, with 2013 done and dusted, they have to start all over again.

[John from Moneycorp]

Happy New Year all - please find the monthly Australian dollar review below, thanks.

Having begun 2013 in fine fettle the Australian dollar turned tail in late spring and spent the rest of the year on the retreat. The process continued in December with the Aussie falling a further -4%. In that month alone it lost seven cents to sterling, six cents to the euro and two to the US dollar.

The Reserve Bank of Australia had a big hand in the process as Governor Glenn Stevens and his team continued their blitz of negativity about the "overvalued" currency. There was still no sign of any direct intervention by the RBA to sell the Aussie but investors could see no mileage in buying the currency in the face of such a PR onslaught.

By and large the disappointing Australian economic data tended to help the RBA in its pursuit of a weaker dollar. A revision to the figure for economic growth in the third quarter put it at less than before. The balance of trade was in deficit for a fourth consecutive month with imports rising as exports stagnated. Consumer confidence deteriorated. Any possible benefit from a 21k increase in employment and a big swing from part- to full-time working was wiped out by a rise in unemployment from 5.7% to 5.8%.

But to the surprise of many, the first two business days of the new year brought signs that investors may be reassessing their extreme bearishness about the Aussie. Together with the Japanese yen, which also had a rotten time in 2013, the Australian dollar rebounded sharply, picking up three cents in the space of just 24 hours. The significance of the swing remains uncertain: Does it represent a change of heart for the new year or was it simply bored traders returning from holiday and looking to spice up the FX market?

The answer might become clearer in the first full week of January, when most participants will be back at their desks and the market will be functioning more normally. But either way, the new-year bounce was a shot across the bows of anyone who thinks the Aussie is a one-way bet.

[thearmchairdetective]

Happy New Year to you too John.

[John from Moneycorp]

Hi all, update below on this week, thanks.

 

After the Aussie's miraculous rally on the first working day of the new year a sense of reality has returned.

 

In the last week the Australian dollar lost two cents to the British pound and three quarters of a cent to the US dollar.

 

There was no particularly compelling news to provoke the retreat, just an underlying belief that last year's selling was broadly the right thing to do.

[likesshopping]

Thanks for all your info John - its very interesting reading.

[John from Moneycorp]

Some positive news from the UK released today - the UK unemployment rate has dropped to 7.1%, close to the point at which the Bank of England has said it will consider raising interest rates.

[John from Moneycorp]

The Australian dollar is considerably stronger against the pound over the past few days.

 

Why?

 

This follows the Reserve Bank of Australia (RBA) announcement in which interest rates have been left unchanged at 2.5% - the RBA surprised some by dropping it’s bias towards easing rates.

 

The Aussie has also been boosted recently by a better-than-expected business survey which showed conditions nearly at a three-year high. Other data released has helped too including figures from the housing sector and prices for homes rising.