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The Pound vs Australian dollar

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The Australian dollar is weaker following minutes released from the Reserve Bank of Australia's policy meeting on June 4.

 

In the minutes, the RBA said they were open to further interest rate cuts and that the Aussie dollar could fall further as commodity prices slide.

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Latest review below, thanks.

 

There was nothing to choose between the Australian and New Zealand dollars. Both fell by more than 2% against sterling and by twice that much against the US dollar.

 

A dearth of Australian economic data meant the Aussie had nothing with which to defend itself against the flow of negative sentiment towards all commodity-related and emerging-market currencies. When the US Federal Reserve chairman set out on Wednesday a road map to the wind-down of his $85bn-a-month quantitative easing programme he was not telling investors anything they did not already know but he made it all sound much more imminent and scary.

 

The newly-and brightly-illuminated writing on the wall sent equity and bond prices lower and put the US dollar on an upward trajectory. The hardest-hit currencies were those that had gained most benefit from the Fed's QE largesse and had most to lose from its cessation.

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Latest currency review is below, thanks.

 

The Aussie's week was much more satisfying than the previous one had been. It strengthened by half a cent against the US dollar and by a cent against sterling.

 

A barrage of expectation management from the US Federal Reserve was successful in persuading investors to tone down their slightly hysterical response to the US Federal Reserve's warning of an end to quantitative easing. The effect was to propel the commodity currencies to the top of the ladder, leaving the "major" currencies behind.

 

There was little among the economic statistics to help the Australian dollar. Bank lending to the private sector continued to increase by a worthwhile 0.3% a month and the manufacturing sector purchasing managers' index jumped six points to 49.6, is strongest reading in more than a year. This Tuesday the Reserve Bank of Australia is expected to keep its benchmark interest rate steady at 2.75% but is also likely to hint at a lower rate in the future.

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The Australian dollar has weakened against most major currencies after comments from the Reserve Bank of Australia Governor Glenn Stevens. In his statement, he said that the downward phase of the investment boom in the country is likely to pose significant challenges.

 

He also cautioned about a ‘strong currency that still threatens many areas of economy’.

 

These comments have led to a weaker Aussie dollar against the pound.

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The latest currency review is below, thanks.

 

In a busy week the US dollar was the top performer, strengthening by one and a half cents against the Aussie and by three and a half against the pound. The Australian dollar was steady against the euro and the Japanese yen.

 

The Australian dollar suffered a hit on Tuesday when the Reserve Bank of Australia kept its benchmark interest rate steady at 2.75% and reiterated that "the inflation outlook... may provide some scope for further easing." The comment should not have come as a surprise to investors but they didn't like it anyway.

 

It suffered another on Friday when the US employment data came in much stronger than expected, increasing the likelihood that the US Federal Reserve would soon begin to wind down its quantitative easing programme.

 

Although the Aussie lost ground to the US dollar on the news, the pound lost more.

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The latest Australian dollar review is below.

Had it not been for the US dollar's even worse performance the Aussie would have found itself at the bottom of the pile last week. It lost more than a cent to sterling and collected less than a cent against the week's biggest loser.

Investors continue to obsess about the US Federal Reserve, their white knuckles hooked around hair triggers. Last week it was the Fed chairman's promise of "highly-accommodative monetary policy for the foreseeable future" that got them moving, sending the US dollar south as quickly as it had risen seven days earlier. Every currency gained ground against the Greenback but the Aussie's pickings were meagre.

Some 40% of Australia's exports go to China and the economy of that country is slowing. Investors fancy that reduced Chinese demand will continue to weigh on the Australia's own economy and its currency.

The latest Reserve Bank of Australia minutes suggest that the Australian dollar was doing enough for now to stimulate the economy – the minutes also indicated a further interest rate cut is unlikely in the short term.

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Some good news for the pound this morning.

 

UK unemployment falls by 57,000 to 2.51 million in the three months to May.

 

Minutes from Mark Carney's (new Governor of the Bank of England) first monetary policy meeting were released this morning – these showed he voted against more quantitative easing.

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Some good news for the pound this morning.

 

UK unemployment falls by 57,000 to 2.51 million in the three months to May.

 

Minutes from Mark Carney's (new Governor of the Bank of England) first monetary policy meeting were released this morning – these showed he voted against more quantitative easing.

 

Yeah and the rest of his cronies by the look of things....Roll on $1.70 :biggrin:

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Hi All

 

Please find this weeks currency update below

 

A difficult but by no means disastrous week for the Aussie left it at the back end of the field. It lost half a cent to the pound and the US dollar.

 

Wednesday was a difficult day for the Australian dollar. At roughly the same time the Australian consumer price index data showed inflation slowing to 2.4% and China's manufacturing sector purchasing managers' index fell by half a point to 47.7. The inflation number was bad for the Aussie because it made lower interest rates more likely. The Chinese PMI was bad because a slowdown in Chinese manufacturing means reduced demand for Australian minerals and energy exports from its biggest customer.

 

Sterling's performance was tepid despite the UK economy expanding by 0.6% in the second quarter of the year. Though the figure was double that of the first quarter, it was exactly as investors had expected; because of that, they sold the pound.

 

Moving into this week, the Aussie lost ground overnight taking the GBP/AUD back to the highs we saw a few weeks ago this is in reaction to Glenn Stephens (Governer of the RBA) speaking overnight, he said second-quarter inflation data suggests there’s still room to lower interest rates if required and that he wouldn’t be surprised if the currency dropped further.

 

The Australian dollar dropped as traders added to bets the RBA will reduce the benchmark rate by a quarter percentage point at next week’s meeting,

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Please see a monthly review below on the Australian dollar – attention turns to the Reserve Bank of Australia and their interest rate decision tomorrow.

 

July was another awful month for the Australian dollar. In June it came last among the ten most actively traded currencies and in July it was at the bottom of the table again. The losses last month were less severe though: In June the Aussie fell by 5% against the pound and by 5.5% against the euro while in July those declines were "only" 2.5% and 4%. Since the beginning of the year the Australian dollar has fallen by 9% against the pound and by 16.5% against the euro.

 

In most countries the authorities would be devastated to see their currency trashed like that. But the Australian government and the Reserve Bank of Australia have maintained for ages that their dollar is too strong. Even after this year's fall they apparently still feel the same way. RBA governor Glenn Stevens said in late July "It would not be a major surprise if a further decline occurred over time." To help it on its way, the governor also hinted at an interest rate cut in the pipeline, which would further diminish the attraction of the AUD to investors.

 

And the background for the Aussie dollar is still a difficult one. Nearly a third of Australia's exports - mainly iron ore and coal for making steel - go to China. Chinese demand has fallen as the recession and its after-shocks have led to dwindling demand for the export products that China builds with that steel. Falling demand for coal and iron ore means lower prices for them, so Australia is exporting less stuff and having to sell it more cheaply. That, in turn, means less demand for the Australian dollars that customers use to pay for the country's exports.

 

It is not a new situation but it is one that continues to weigh on the Aussie dollar. The end of the mining boom means that Australia will need new industries to fill the economic gaps, not least the tax gap. In the next four years, taxes paid by companies to the government are expected to fall by A$10bn. That means either lower government spending or increased taxes elsewhere. The first of these will be a tax on bank deposits, which starts in January 2016.

 

There is no consensus about what would be a "fair" value for the Australian dollar but there is general agreement - and not just in Canberra - that it is somewhat lower than its current level. From its highs four months ago the currency has fallen by 14% against the pound and by 22% against the euro. That might sound a lot but the Aussie still has a way to fall if (and it is "if") it is to return to its pre-global-financial-crisis levels.

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The Reserve Bank of Australia cut its policy interest rate on Tuesday to an all-time low of 2.5%

 

The Reserve Bank of Australia's (RBA) decision to cut its Cash Rate from 2.75% to 2.5% was widely anticipated – in their statement, the RBA's failure to hint at a subsequent cut, and the tone and sentiment of the comments from RBA governor Glenn Stevens was enough to make the Aussie dollar slightly stronger against most currencies.

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Hi Nikki

 

Thanks for your message.

 

As mentioned, the interest rate cut was widely expected – the tone of the sentiment from the RBA also suggested future cuts may not be forthcoming therefore this actually boosted the Australian dollar (slightly).

 

In terms of what will affect the exchange rate moving forward, economic news from China will be a major influence. If there are signs of a slowdown in growth from China this could make the Aussie dollar weaker against the pound (and other currencies).

 

If you are looking to transfer money in the short term, a lot of our customers are exploring the option of market orders – more information can be found here on the Poms in Oz currency pages - http://moneytransfer.pomsinoz.com/various-ways-to-buy-currency.html

 

Please feel free to private message me if you want any further information.

 

John

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The Australian dollar has strengthened after strong July trade numbers from China – the numbers were better than expected.

 

China is Australia's main export market therefore any economic data released can affect the exchange rate.

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The latest Euro/Australian dollar update is below - thanks

 

After falling to the bottom of the pile a week earlier the Aussie was the top performer among major currencies in the last seven days. It strengthened by five cents against the euro, four cents against the British pound and three against the US dollar.

 

Neither Euroland nor Australia could come up with any particularly impressive economic statistics. The euro zone continued to report falling activity in the services sector and declining retail sales. In Australia house prices were up by 5.1% in the year to June and unemployment was steady at 5.7%.

 

Paradoxically it was an interest rate cut by the Reserve Bank of Australia that sparked the Aussie's upward move. The Cash Rate reduction from 2.75% to 2.5% had been widely expected, so had little negative impact, but in its statement the RBA indicated it had no plans for any further rate cuts. That was a surprise to investors and they hurried to buy back the Aussie dollars they had sold short.

 

Other than consumer confidence there are no important Australia data announcements this week. Euroland reports on industrial production, inflation and the performance of the economy in the second quarter of the year. Analysts reckon gross domestic product expanded by an almost invisible 0.1%. A negative number would mean continued recession and would not be good news for the euro.

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After falling to the bottom of the pile a week earlier the Aussie was the top performer among major currencies in the last seven days. It strengthened by five cents against the euro, four cents against the British pound and three against the US dollar.

 

Yipee more beer tokens in Scotland :wink: Also good for all the 457's heading back home, no?

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The Australian dollar has weakened against the pound following the release of the RBA Monetary Policy Meeting Minutes.

 

The RBA said there was a possibility of a further cut in interest rates – even though they added no cut was likely in the immediate short term.

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Good news for the UK this morning – construction activity grew at the fastest pace in nearly six years in August, in another sign that the economic recovery in the UK is gathering pace.

 

There has also been some positive news for Australia which has boosted the Aussie dollar. Australia reported better-than-forecast growth numbers for the April to June quarter. Gross domestic product (GDP) expanded 2.6% during the quarter, from a year earlier.

 

The Aussie dollar has also been stronger against the pound following the RBA statement earlier this week which did not signal any further interest rate cuts in the short term.

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