AUD Exchange Rates Supported after RBA Holds Interest Rates

AUD Exchange Rates Supported after RBA Holds Interest Rates

The Pound has fallen lower against the Australian Dollar today with levels sitting above 1.78 for the GBP AUD pair. The Reserve Bank of Australia (RBA) have held interest rates at the record low of 1.5% as widely expected. The RBA highlighted that inflation continues to remain below target, although it did signal that inflation could start to rise later in the year and this point appears to be helping support the Aussie today. The reality though is that interest rates are unlikely to be going up in Australia this year at all, or even in 2019 which is likely to hold the Dollar back.

Tomorrow sees Australian trade balance data which could prove important for the strength of the Australian Dollar. Global trade is hugely topical right now with the ongoing trade wars stemming from the US and China; any suggestion that Australia’s exports could decline would be seen as negative for the Aussie.

Clients with a pending requirement to buy or sell Australian Dollars are likely to see a volatile end to the week, when on Friday the US are expected to officially exercise the $50 billion worth of tariffs on Chinese exports. China is also responding in kind to the same value. The commodity currencies such as the Aussie and Kiwi Dollars could see considerable market reaction, especially as the damage so far caused has been limited. How the trade wars develop from here are likely to have a direct impact on Dollar exchange rates.

Brexit this week is also a major theme for the GBP AUD pair ahead of the meeting at Chequers this Friday. A ‘third way’ to resolve the customs issue is expected to be proposed which could give new direction to Brexit. Sterling exchange rates have slipped lower in recent weeks due to general Brexit uncertainty, and so anything which is taken as positive by the UK and EU should only help support the Pound across the board. Friday presents a very volatile end to the week and there could be some better opportunities to buy Australian Dollars if all goes well.

For assistance in transferring funds, and guidance in trying to time the exchange at the best possible opportunity with all these events then please get in touch with me, James at jll@currencies.co.uk.