The Pound vs Australian dollar

[John from Moneycorp]

The Australian dollar has been stronger against the pound in recent days – this is following economic data released from China.

 

A preliminary survey showedt hat China's manufacturing activity increased more than expected in July.

 

China is a key trading nation for Australia so news like this can impact the dollar.

Edited July 24, 2014 by John from Moneycorp

[John from Moneycorp]

Hi all, the latest Australian dollar review is below, thanks.

 

Two events helped theAustralian dollar to achieve the best weekly result among the major currencies.

 

One was a speech by thegovernor of the Reserve Bank of Australia during which he did not once mentionhow overvalued his currency was. The other was a higher than expected readingfor inflation.

 

The Aussie strengthened bytwo cents against sterling, a cent and a half against the euro and half a centagainst the US dollar.

[John from Moneycorp]

The latest Australian dollar news is below, thanks.

 

Although they were outclassed by the South African rand and the Swedish krona the Australian and US dollars shared third place in the weekly major currency league table.

 

The Aussie strengthened by about a quarter of a cent against sterling and the euro. Its week began well when on Monday and Tuesday the assistant governor and governor of the Reserve Bank of Australia gave speeches.

 

In recent months both gentlemen have been known to make tart remarks about the value of their currency which is sometimes "high by historical standards" and sometime just plain "overvalued".

 

But last week no such comment was to be heard. The Aussie's real advantage, however, was Wednesday's Australian inflation figures. They were higher than expected, leading investors to doubt the credibility of the RBA's threat to cut interest rates in order to dampen the currency.

[John from Moneycorp]

Monthly currency review is below, thanks.

 

The Australian dollar had a good run. It strengthened by two and three quarter cents against sterling and by a cent and a quarter against the euro. It could not keep pace with the US dollar though, losing half a cent to the month's leading major currency.

 

Early in July the Reserve Bank of Australia governor made a speech in which he said his currency was "overvalued, and not by just a few cents". It was by no means the first time that Glenn Stevens had offered that opinion but he had seldom made the point with quite so much force. It cost the Aussie an immediate cent and it soon fell to a four-month low against sterling.

 

There was another setback for the Australian dollar when the Australian Bureau of Statistics published the employment data for June. The 16k rise in the number of people in work looked good enough but they were all part-time jobs; full-time employment was down by -4k. Worse, the rate of unemployment ticked up to a four-month high of 6.0%.

 

After that, things looked up for the Aussie. In quick succession two assistant governors, the deputy governor and the governor of the RBA himself all gave speeches with no mention of their currency's overvaluation. Then the inflation figures appeared. They were higher than expected, leading investors to doubt the RBA's earlier threat to cut interest rates in order to dampen investors' appetite for the Australian dollar.

 

And they still like it. Australia's triple-A credit rating and its 2.5% benchmark interest rate make the Aussie a safe currency which offers a relatively high return. The benchmark interest rates for the Japanese yen, the US dollar and the euro are as close to zero as makes no difference. Sterling's 0.5% benchmark Bank Rate looks better but only New Zealand's 3.25% can overshadow the Australian dollar's 2.5% offering, hence the Kiwi's recent run of strength against the Aussie.

 

There can be no doubt that the RBA would like to see its currency lower across the board. However, the lure of a AAA credit rating and a high interest rate mean that investors will not easily be put off by the Australian dollar's alleged "overvaluation". For now, and in the absence of any remedial action by the RBA, look for the Aussie to stay within the $1.76-$1.84 range against sterling that it has occupied since March.

[John from Moneycorp]

The Australian dollar is slightly stronger against the pound today – this is following the Reserve Bankof Australia’s (RBA) August meeting minutes.

 

In their minutes, the RBA made no mention of plans to make the Aussie dollar weaker in their latest comments.

[John from Moneycorp]

The Australian dollar remains strong against the pound – the graph below shows the change in the exchange rate over the past week.

 

 

[John from Moneycorp]

Latest currency review is below, thanks.

Not quite the leader of the pack, the Australian dollar was close behind the US dollar over the eight-day week. It had to concede a quarter of a cent to the Greenback but went up by three times that much against sterling and by a cent and a half against the euro.

Apart from a continued decline in new vehicle sales the week was devoid of Australian economic statistics. The Aussie had to make what it could of the misfortunes of others. Sterling duly obliged with an unexpected slowdown in the rate of UK inflation from 1.9% to 1.6%, which brought out the sellers.

 

Unusually, the Reserve Bank of Australia governor was helpful to his currency. He said in a speech that lower interest rates were not the solution to Australia's stumbling economy. Mr Stevens's words reassured investors that a rate cut was not imminent and they bought the Aussie.

[John from Moneycorp]

The Australian dollar had a fairly successful week. It strengthened by three quarters of a cent against sterling and by a cent and three quarters against the euro as well as adding half a US cent. It did so despite a continued fall in the price of iron ore, one of Australia's main exports.

 

The Aussie is still reaping the benefit of the earlier hint by the Reserve Bank of Australia that interest rates are not about to fall.

[John from Moneycorp]

The pound is under pressure following a poll this week which showed an increase in support for Scottish independence.

 

This poll has caused uncertainty over the future of the United Kingdom - this has led to the pound weakening against most currencies including the Australian dollar.

[John from Moneycorp]

The pound is still under pressure as markets are nervous about the potential impact of a vote by Scotland to split from the rest of the UK.

 

The Australian dollar has also been boosted by retail data released in Australia which was positive.

[srg73]

Kin Scotish are costing me money as needing to exchange over next couple of days.

[Misplaced]

Same here! I have a little egg that I need to get over here but don't know whether to wit until the Scots have voted!? Waiting has 2 effects the way I see it and that is if they vote Yes the exchange rate will weaken the pound even more and if I don't wait and they vote No I could lose out that they way as well.

 

Advice welcome!

[wubbledoos]

Once interest rates start to go up in the UK, which they say will be within the year then the rate will go back up and should go higher than 1.8ish - so I've read/been informed.

[Guest Lamby]

I'm in the same boat - have my money from selling my house in UK to get over here. Its a nightmare but I'm gambling on the No vote - its gone down too far to back out now

[ross1983]

I'll be voting No for all of you! We are taking a double hit just now as we are trying to sell our house & will then (hopefully) have £25-30k to transfer! The housing market in Scotland is slowing right down & the exchange rate dropping!

 

My biggest nightmare is if theres a Yes vote - 18 months of negotiations with the EU & WM. Where will the £ be during/after that?!?

[John from Moneycorp]

Hi all

 

The pound/Australian dollar exchange rate is fluctuating a lot at the moment.

 

There is some information in the following link on the different ways you canbuy your currency. These can protect you if the exchange rate moves against youand also you can take advantage if the rate moves in your favour - http://www.pomsinadelaide.com/index.php?pageid=forex

Might be worth speaking with your Moneycorp Account Manager who can talk thesethrough with you.

 

Thanks

 

John

[Misplaced]

Thanks John! I will speak to mine tonight a.m. UK time. Do you know if it is possible to do a deal where you agree a rate now but can change the rate say after the Scots vote? What I am trying to say is if the rate is $1.76 now and I agree to this rate but ask them to hold that rate until after the vote. If the vote is a 'No' and the exchange rate goes up I can then take the higher rate? Hope this makes sense?

[John from Moneycorp]

Thanks John! I will speak to mine tonight a.m. UK time. Do you know if it is possible to do a deal where you agree a rate now but can change the rate say after the Scots vote? What I am trying to say is if the rate is $1.76 now and I agree to this rate but ask them to hold that rate until after the vote. If the vote is a 'No' and the exchange rate goes up I can then take the higher rate? Hope this makes sense?

 

No problem.

 

You can put higher and lower limits in place, relating to the exchange rate, to help you take advantage of any favourable movements and you can also protect yourself if the rate moves against you.

 

Addtionally, you can lock into the exchange rate for a period of time however this would also mean you are committed to that rate - there are a variety of different ways you can manage your risk when it comes to international money transfers.

 

As every situation is different and everyone has different timelines then best to chat these through with your Account Manager.

 

Thanks

 

John

[John from Moneycorp]

The pound has today regained some lost ground against the Australian dollar.

 

In relation to Scottish Independence, the latest opinion poll conducted by the Scottish newspaper the Daily Record reported a swing back in favour of the No campaign, with 53% opposed to Scottish independence against 47% for.

 

Investors remain concerned of the impact of Scottish Independence on the rest of the UK. The British pound is susceptible to volatile price movements, as the market reacts to every opinion poll released, ahead of next Thursday’s vote.

 

Additionally, the Australian dollar has been weakened by speculation that both the US and the UK will begin lifting interest rates well before the Reserve Bank of Australia.

[John from Moneycorp]

The pound has experienced intense price swings against the Australian dollar over the past five days.

 

Sterling started the week very much on the back foot as last weekend’s YouGov opinion poll sent shock waves through the financial markets. The ‘Yes’ campaign had apparently taken a 6 point lead against the ‘No’ camp, bringing a breakup of the UK closer to reality.

 

Further poll results over the last few days now suggest that support for Scottish independence is on the slide, helping the pound to rebound strongly.

With just six days to go before Scotland’s referendum, investors remain highly concerned over the impact of Scottish Independence on the rest of the UK. The British pound will remain susceptible to volatile price movements, with the market reacting strongly to every opinion poll released between now and next Thursday, and of course to the vote itself.

 

The Australian dollar has suffered its own weakness in the foreign exchange markets. The decline is despite of the massive job creation number delivered this week by the Australian Bureau of Statistics, showing that there are now an all-time high 11.7 million Australians in work.

 

Although a whopping 121,000 jobs were created during August, almost 107,000 were for part time positions, suggesting the labour market is far from robust. Australia’s mining industry continues to feel the pain associated with the fall in global commodity prices. The desire of the Reserve Bank of Australia to see the AUS$ / US$ rate of exchange decline from its recent ‘overvalued’ level, in order to boost its exports, left the Aussie dollar vulnerable to further weakness

[John from Moneycorp]

Hi all – the latest Australian dollar update is below, thanks

 

None of the commodity-oriented currencies had a great week. Investors shied away from them because of nervousness about the China and other emerging market economic performance. The Aussie took more of a hit than the Canadian dollar but fared far better than the NZ dollar. It lost two and a half cents to the US dollar and three and a half to sterling.

 

It received no help whatsoever from the Australian economic data. The only figure released during the week was the Conference Board's leading indicator. It was slightly more positive, rising from 0.2% to 0.5%, but failed to impress investors.

 

The Reserve Bank of Australia managed to get through a complete speech without mentioning the "overvalued" Australian dollar. That might have been positive for the Aussie had it not been for New Zealand's prime minister and central banker carping about "unjustified" and "unsustainable" strength of their own currency.

[John from Moneycorp]

Please find a monthly review below of the Australian dollar.

 

A month ago the Reserve Bank of Australia was carping about its "overvalued" currency, as it had been doing for months. Even though the Aussie had weakened from its record highs by 15% against the US dollar and by 10% against the pound, the RBA thought it was still too strong for the good of the Australian economy. A month ago investors disagreed. In September they fell in with the RBA's argument.

 

After spiking higher early in the month the Aussie was given a downward push by investors when they saw the Australian employment figures for August. On the face of it the 121k increase in jobs was good news, as was the fall in unemployment from 6.4% to 6.1%. But the vast majority of those new employees were part-timers, not at all what the doctor ordered. They were far from the worst employment data that investors had ever seen but they were a handy excuse to take profits on long-Aussie positions. Investors began to bail out, selling off the dollars they had previously bought.

 

The Aussie's rout took on a life of its own, as these sharp moves can often do. The falling currency encouraged more sellers, which caused a further decline, which brought in more sellers. Selling a currency because it is going down (or buying one because it is rising) is not always a silly idea.

 

The bottom line was monthly losses for the Australian dollar of almost 5% against sterling and nearly 6% against the US dollar. Compared with its position at the beginning of the year the Aussie is still 3% stronger against the US dollar but it is down by two and a half cents or -1.4% against the British pound. Its only appreciable gain since 1 January is the 5.7% by which it has strengthened against the troubled euro.

 

Despite Australia's 2.5% benchmark interest rate (Britain 0.5%, America 0.125%, Euroland 0.05%, Japan 0.02%) investors are no longer convinced that the Australian dollar represents good value for money. Economic growth there has slowed, corporate activity is slowing, the prices paid for the country's coal and mineral exports are falling. More importantly, the economy of China - Australia's biggest customer - is losing speed. That means lower demand for cheaper Australian exports and reduced commercial demand for the Australian dollar.

 

If fewer customers are buying fewer Aussie dollars the Aussie is likely to fall further. That is not a given: other factors are in play which could continue to support it, not least the relatively high interest rate and Australia's AAA credit rating. But a further decline is likely, now that investors have been reminded it can go down as well as up.

[John from Moneycorp]

The Australian dollar remains relatively strong against the pound.

 

Consumer Prices Index (CPI) data released from the UK yesterday also had a slight impact – this led to the view that any interest rate rise in the UK might be a while off.

[John from Moneycorp]

Weekly currency review is below.

 

Renewed uncertainty and nervousness about the global economic outlook made for a volatile and unpredictable week in financial markets.

 

The usual loose bond between the commodity-related currencies evaporated and the antipodean dollars headed in opposite directions. The Aussie headed south with sterling, remaining roughly unchanged against the pound.

 

It lost a third of a US cent and fell by a cent and a half against the euro. The few Australian ecostats had minimal impact.

[John from Moneycorp]

After the previous week's agitation a return to normality in financial markets tended to help the commodity-related currencies.

News that China's economy expanded at an annual pace of 7.5% in the third quarter also helped because it meant faster-than-expected growth for Australia's biggest customer.With Australian inflation exactly on target at 2.3% investors were inclined to favour the Aussie; it was steady against the US dollar and strengthened by three quarters of a cent against sterling.