AUD could be set for further weakness

Pound to Australian dollar rate remains north of 1.80 despite sterling jitters

This week will see the release of Australian unemployment data. Australia’s economic performance is coming into question of late due to several areas under performing. The prediction is that there will be little movement in unemployment data and that the figure will remain around 5.3%. If the figure arrives away from expectations volatility can be expected. The Reserve Bank of Australia will be holding off on any rate hikes until we see improvements in wage growth and the concerns regarding cooling house prices are made clear.

Australia is heavily reliant on China purchasing its goods and services and a result Chinese data has an impact on the Australian economy, and in turn the Australian dollar. Chinese GDP is released later this week and will give what is meant to be a clear indication as to the health of the Chinese economy. The trade war with the States is certainly having an impact on the Chinese economy, but investors wait with baited breath to take advantage if the impact is more severe than expected. A small decline to from 1.8% to 1.6% is predicted; if we see a further fall expect the Chinese Yuan to suffer as well as the Australian dollar.

The Aussie dollar is experiencing further losses as a result of the China – US trade war as investors move away from riskier commodity based currencies in search of safe haven currencies. The US dollar is currently the destination of choice with the promise of safety and high returns. We witnessed a rate hike from the Federal Reserve recently pushing current interest rate levels to 2.25%, with another predicted by the end of the year. We are also witnessing some of the best bond yield returns for over seven years.

If you have an upcoming Australian dollar requirement and would like further information on the factors likely to impact exchange rates, feel free to use the form below to ask a question. I’ll be more than happy to get in touch personally and discuss your enquiry.