Monthly Currency Update - GBP/AUD September 09

[Guest HIFX plc]

Hi All,

 

Here is an update of what’s been happening in the Currency Markets throughout August with the Aussie Dollar.

 

The revival in the domestic economy was highlighted after Australian employment exceeded all expectations by rising 32,200 in July, posting its largest gain in nine months to keep the jobless rate steady as 5.8%. A separate report revealed that retail sales for June disappointed with a 1.4% drop, however the decline followed three very strong months and lifted sales for the entire second quarter by a healthy 2.0%.

 

The Central Bank slashed Australian interest rates to record low as it moved to cushion the economy from the global financial crisis, but recent strong data has prompted its easing bias, setting the stage for eventual rate rises. This was highlighted after Australian consumer confidence climbed for a third month in August to a near two-year high and demand for domestic home loans rose for a ninth straight month in June.

 

In the UK, recent Unemployment figures showed a 13 year high which had a negative effect on the Pound as they suggest that the deterioration in the labour market is yet to show signs of stabilisation.

 

The RBA left rates unchanged in August at 3.00%.

 

GBP/AUD crashed to a fresh 13-year low last week with the Aussie buoyed by a surprising jump in business investment last quarter, suggesting the Australian economy is growing faster than expected and underpinning bets for local rate hikes later this year. Thursday’s data from the government also showed firms expected to spend heavily in 2009/10 as well, transforming the outlook for one of the hardest hit parts of the economy. Business investment had been expected to drag on growth with analysts forecasting a 5.0% fall in capital spending. Yet the numbers showed a 3.3% rise in the second quarter, and the AUD24.07 billion spent was the second highest reading on record. Crucially firms were also upbeat about their spending plans for the year the end of June 2010. The latest estimate was for spending of AUD90.6 billion in 2009/10, a major upgrade from the previous estimate of AUD78.5 billion.

 

Current Central Bank Rates:

 

Australia (Reserve Bank): 3.00% (Next meeting 6th October)

UK (Bank of England): 0.50% (Next meeting 10th September)

 

GBP/AUD Highs & Lows of August:

 

High: 2.0273

Low: 1.9248

 

A movement of: 5.33%

 

Difference this would make on £200k

 

High: 405,460 AUD

Low: 384,960 AUD

 

A difference of 20,500 AUD.

 

Whilst FX isn't the most thrilling of subjects, the sooner you begin to think about your money transfers, the more likely you are to make your money go further.

 

Regards

 

 

 

 

Jon Sermon

HiFX