John From Moneycorp

The Pound vs Australian dollar

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    The Australian dollar is slightly stronger this morning following the Liberal-National coalition winning the Australian election.

     

    Also, data from China showed that exports rose more than expected in August to 7.2%. Worth keeping an eye out on further data released from China tomorrow - Chinese industrial production figures and retail trade for August are due out on Tuesday.

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    The Australian dollar is slightly stronger this morning following the Liberal-National coalition winning the Australian election.

     

    Also, data from China showed that exports rose more than expected in August to 7.2%. Worth keeping an eye out on further data released from China tomorrow - Chinese industrial production figures and retail trade for August are due out on Tuesday.

     

    What's the chances of it getting up past 1.70 again John? Need to transfer more money :wink:

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    What's the chances of it getting up past 1.70 again John? Need to transfer more money :wink:

     

    It can be dependent on the data and economic news released and whether this is in line with market expectations - worth exploring and discussing with your Moneycorp Account Manager the different ways you can buy your Australian dollars (this can help you take advantage of any exchange rate movements).

     

    Some information on these can be found here - http://moneytransfer.pomsinoz.com/various-ways-to-buy-currency.html

     

    Thanks

     

    John

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    Interesting comments from Chancellor George Osborne yesterday – he said in a speech that the UK economy is “turning a corner”.

     

    He appeared to be directing his speech at his opponents, particularly the Labour party, who have been critical of the coalition government’s austerity measures.

     

    Time will tell if he has jumped the gun with his bullish comments – there has certainly been some positive signs recently in the UK, however there is still a long road ahead.

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    Clearly directing his speech at Labour but the UK is still "poorer" than it was 4 years ago. Unemployment in my county is fast approaching 11%. How can he justify the use of phrase "turning a corner?"

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    An overview of the currency news over the past month is below, thanks

     

    After six months on the retreat the Aussie dollar has been digging in. In early August and again at the beginning of September it touched a three-year low against the US dollar; in late August it rebounded from a three-year low against sterling.

     

    Having knocked it 16% lower against the pound and 12% lower against the US dollar from the highs of this spring, investors appear to be rethinking their attitude to the Australian dollar.

     

    They cannot be doing so because of the current strength of the Australian economy. The latest surveys show manufacturers and service providers continuing to report declining activity, as they have for more than a year. Business confidence is still hovering at the dividing line between optimism and pessimism. Australia's economy, like Britain's, expanded by 0.6% in the three months to end-June but it could be a struggle to achieve similar growth in the current quarter.

     

    But: Economic activity in China is picking up again and the Reserve Bank of Australia looks less likely to take interest rates lower. Both of these factors are important to the way investors see the Aussie. China is Australia's biggest customer, buying iron ore and coal on a grand scale. The global financial crisis and recession dampened China's appetite for Australia's commodity exports but now it seems to be on the rise again. Greater demand for Australia's exports means greater demand for its currency.

     

    Partly as a result of that improved outlook, the Reserve Bank of Australia is seen as less keen to lower its official interest rate. In the last 12 months the RBA's benchmark Cash Rate went down from 3.5% to 2.5%. The lower return, together with the threat of more rate cuts in the pipeline, made the Aussie less attractive to investors. Take away that threat though, and the current 2.5% still looks considerably more attractive than the rates of 0.5% or less that are attached to the pound, the euro, the Swiss franc and the US dollar.

     

    On the basis of just a couple of week's performance it would be rash to conclude that the Australian dollar's retreat is over, let alone to predict a new strengthening trend. However, anyone needing to buy Australian dollars might want to take advantage of today's prices while they are still there to be had.

     

    Even if the Aussie were to continue to weaken, they would still have bought their dollars at close to the cheapest price in three years.

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    The pound is stronger against the Australian dollar today.

     

    There is anticipation, in Australia, that there could be another interest rate cut in the near term.

     

    The pound has also reacted well from comments from Bank of England Governor Mark Carney – his personal view is that he doesn’t see a case for quantitative easing stating the UK economy is strengthening.

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    i've seen rates of £1.00 - $1.69

     

    Where? Also if I want to send aud to England do I want the £ to be strong against the dollar or the other way round to get more £s for my aud's sorry if I seem daft but I don't understand this money exchanging lark!

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    Where? Also if I want to send aud to England do I want the £ to be strong against the dollar or the other way round to get more £s for my aud's sorry if I seem daft but I don't understand this money exchanging lark!

     

    If the £ is stronger then you'll be getting more other currencies for your £. So if you are exchanging AU$ for £ them you want AU$ to be stronger so you get more £ for your dollar.

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    The Australian dollar has been under pressure recently, losing lost more than three and a half cents to the British pound.

    Most important to the Aussie's fortunes was the US Congress, where Republicans and Democrats cannot agree on a new spending bill. With no last-minute compromise the US government will have to shut down non-essential services this week. Investors see this as bad for the US dollar and bad for the commodity currencies, including the AUD.

    On Tuesday, the Reserve Bank of Australia kept its Cash Rate steady at 2.5% and implied in its statement that it was not planning another rate cut.

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    Where? Also if I want to send aud to England do I want the £ to be strong against the dollar or the other way round to get more £s for my aud's sorry if I seem daft but I don't understand this money exchanging lark!

     

    I had seen that on the ICICI website. You want the £ to be weak against the dollar, if you were buying AUD and the pound was strong, it would mean that you were getting more AUD, so if you want to get more money from the £ you want it to be weaker than the AUD for that reason.

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    A review of the Australian dollar from the past month is below - thanks.

     

    The antipodean duo led the field in September, gaining ground against the world's other major currencies. It was the New Zealand dollar that eventually took the crown, adding two cents against the Aussie, but the performance of the Australian dollar was proof that it hasn't yet given up the struggle. The AUD strengthened by 4% against the US dollar (four cents), 2% against the euro (almost three cents) and by 0.5% against the British pound (three quarters of a cent).

     

    The Aussie began September in rather better form than it finished. For the first three weeks of the month it looked as though it really would confound the pessimists who had condemned it to a continued erosion. In the process it almost regained the levels last seen in mid-August. But the rot set in once again and at the time of writing, in early October, the Australian dollar was within a cent of a three-year low.

     

    Most of the statistical evidence offered a confusing mix of positive and negative news from the Australian economy. Business confidence improved but business conditions deteriorated. New motor vehicle sales were up in August but the increase was not enough to wipe out the previous month's decline. The same was true of new home sales, where the rise in August was smaller than the fall in July. An unmistakably bad set of employment figures showed fewer people in work and more on the dole. Two weeks later an unmistakably good set of manufacturing figures showed growth returning to the sector for the first time since February last year.

     

    Ecostats aside, the Aussie's main driver in the last month was investor sentiment; not just sentiment about the AUD itself but the general attitude to life, the universe and everything. During most of September investors were optimistic, helped by America's non-invasion of Syria, by the improving economic performance of Australia's biggest export customer, China, and by the Reserve Bank of Australia's hint that it was not teeing up another interest rate cut. At the end of the month however, investors were worrying about political problems in Washington and Rome that had negative implications for the US dollar and the euro, and therefore for a large chunk of the Western world's economy.

     

    It will probably not be until the US Congress gets its sorry act together that the Aussie will again behave as a free agent, and on current form that could take weeks, not days. In the meantime the Australian dollar is likely to react to political developments in Washington at least as vigorously as it reacts to economic developments in Australia.

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    The latest Australian dollar update is below, thanks.

    The Australian and New Zealand dollars both had a good week. For the Aussie it meant a cent-and-a-quarter gain against the British pound, two thirds of a cent won from the euro and a half-cent climb against the US dollar.

    As the week progressed investors became steadily more confident that the warring politicians in Washington would not drive the United states over the brink of default by refusing to approve an increase to the "debt ceiling", the aggregate limit on the amount the government can borrow. With that in mind they shunned the safe-haven Japanese yen and reinvested in the allegedly more "risky" commodity-oriented currencies including the Australian and New Zealand dollars. The Australian economic data helped that cause; more than 9k more people found work in September and the unemployment rate fell from 5.8% to 5.6%.

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    The Aussie dollar had a difficult week. It lost two thirds of a cent to the US dollar, a cent and a quarter to the pound and two and a quarter cents to the euro.

    Why?

    Two important influences affected the Australian dollar, both of them occurring on Wednesday morning.

    The first, and a positive for the Aussie, was a higher-than-expected 2.2% inflation rate. Investors saw it as delaying any move by the Reserve Bank of Australia to reduce AUD interest rates.

    The second event, just a couple of hours later, was a negative. There was a sharp sell-off for all the commodity-related currencies in response to a squeeze in the Chinese money market that pushed up short-term rates. Investors feared that the Chinese authorities were deliberately trying to dampen the economy and, with it, Chinese demand for the exports of Australia, New Zealand and Canada.

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    Please see a monthly review on the Australia dollar below – thanks.

     

    After a mediocre run the previous month the Aussie excelled itself in October. It rose by nearly four cents against the British pound - more than 2% - and by half that much against the US dollar and the euro. Among the top dozen most actively-traded currencies the Australian dollar was the top performer.

     

    It all came down to interest rates. Other things being equal, investors prefer to put their money into the currencies with the highest interest rates (proportional to inflation) because by doing so they get the highest return. There had been concern that the Reserve Bank of Australia was inclined to lower its Cash Rate, which sets the benchmark for the rate paid to bank depositors, but the RBA set those worries to rest with its monthly statement in early October. Rates were not about to go down.

     

    The US Congress also helped things along for the Aussie, in a backhanded sort of way, when a power struggle there resulted in spending cuts which shut down part of the federal government for half the month. Because of the negative impact of that on the US economy investors assumed America's central bank, the Federal Reserve, would delay the wind-down of its economic stimulus. Were it to do so the Fed would continue churning out $85bn a month of newly-printed money. Some of that would find its way directly into the higher-yielding Aussie and some would help increase Chinese demand for Australia's coal and iron ore exports.

     

    If the Americans helped the Australian dollar higher by accident the Chinese knocked it back with similarly little malice aforethought. When the Beijing authorities decided to dampen their potentially runaway economy by squeezing short term interest rate higher they also scared investors away from Far Eastern stock markets and the NZ and Australian dollars. The logic for investors was that a dampened Chinese economy would have less appetite for Australia's exports and so less demand for the AUD.

     

    Despite that setback the Aussie still managed to beat every other currency on the block in October. Whether it can do so again in November will depend to some extent on the United States. If the Federal Reserve decides to extend its money-printing stimulus it will improve the Aussie's prospects

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    The Australian dollar has weakened against the pound.

     

    Why?

     

    Growth figures from the US led to speculation that the US Federal Reserve could start tapering its stimulus program sooner rather than later.

     

    Reserve Bank of Australia lowered its GDP projection.

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    Recently, the pound has been much stronger against the Australian dollar.

     

    There is a “risk off” sentiment at the moment which tends to have an adverse affect on the Australian dollar – combined with positive economic data from the UK, this has shaped the exchange rate making the pound stronger against the Aussie.

     

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    What are your forecasts over the next 6 months? We're coming over next August and wondering when we should start tranfering money? Will the £ get back to $2?

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    Recently, the pound has been much stronger against the Australian dollar.

     

    There is a “risk off” sentiment at the moment which tends to have an adverse affect on the Australian dollar – combined with positive economic data from the UK, this has shaped the exchange rate making the pound stronger against the Aussie.

     

     

     

    Hello Mr Moneycorp

     

    I know this is a bit of an open ended question and one that really is going to be anyone's guess

     

    but I'll ask it anyway! I/we will have approx 100k sterling which is my nest egg after house sale and are taking other funds to OZ with us for settling in etc. Would it be best to change into aus dollars and leave in our bank account there or leave over here with our rubbish interest rates! And the million dollar question at what rate will it be the best time to exchange?? We won't be buying any property for at least two years from when we get there.

     

     

    (We will be using Moneycorp rather than our bank)

    cheers

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    Hi,

    Many thanks for your message.

    In terms of when to transfer your money, there are a few factors which can affect this decision – for example, is there a specific date when you will need a certain amount of Australian dollars in your Oz bank account. Are you making a purchase or do you just need money over there for living costs.

    What we always recommend, and part of our service offering, is to speak regularly with your Moneycorp Account Manager – they are qualified to provide guidance on the Australian dollar and they will work with you to ensure any currency transfers you make are maximised. It sounds like you are maybe registered with us already – however, if not you can sign up online by clicking this link.

    Please feel free to private message me your name and Moneycorp customer number and I can arrange for one of the team to get in touch.

    Kind regards

    John

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    Hi,

     

    Many thanks for your message.

     

    In terms of when to transfer your money, there are a few factors which can affect this decision – for example, is there a specific date when you will need a certain amount of Australian dollars in your Oz bank account. Are you making a purchase or do you just need money over there for living costs.

     

    What we always recommend, and part of our service offering, is to speak regularly with your Moneycorp Account Manager – they are qualified to provide guidance on the Australian dollar and they will work with you to ensure any currency transfers you make are maximised. It sounds like you are maybe registered with us already – however, if not you can sign up online by clicking this link.

     

    Please feel free to private message me your name and Moneycorp customer number and I can arrange for one of the team to get in touch.

     

    Kind regards

     

    John

     

     

    Thanks John

     

    We will get in touch when we need to

     

    regards

    Calvin

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    The Australian dollar continues to weaken against the pound.

    Why?

     

    - IMF comments yesterday that the Aussie dollar was 10% overvalued

     

    - RBA comments open to another interst rate cut in Australia

     

    - “Risk off” sentiment continues – negative news from eurozone

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