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John from Moneycorp

The Pound vs Australian dollar

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Hi everyone,

 

I am John from Moneycorp, the international money transfer specialists - this thread will contain regular updates relating to the GBP/AUD exchange rate and any data released which could affect it.

 

Any data released in Australia, the Eurozone and the UK, of course, could have an impact on the exchange rate – much is dependent on what happens with these economic factors relation to the exchange rate and what happens to it over the next few months.

 

In recent months we have seen the Australian dollar much stronger against the pound. Australia continues to reap the rewards of a strong economic boom and has escaped the global downturn relatively unscathed. Growth from emerging nations has increased demand for its commodities, while a higher interest rate compared to its peers has fuelled demand for AUD based assets.

 

The UK economy is struggling under the challenges of austerity, readjustment and recovery. We are in a technical recession and fears of a prolonged economic downturn are gathering pace. Such a negative outlook will limit gains and Sterling won’t see any major recovery until underlying economic conditions radically improve.

 

News today illustrated again the challenges the UK economy faces and confirmed the UK recession has deepened - latest official figures from The Office for National Statistics show the output of the economy fell by 0.7% between April and June.

 

Thanks

 

John

Edited by John from Moneycorp

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The Australian dollar is strong following positive news from the eurozone.

 

In a statement on Sunday, German Chancellor Angela Merkel and Italian Prime Minister Mario Monti pledged to do everything to protect the eurozone and said they would quickly implement measures agreed by European leaders in June.

 

 

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Contrasting data from Australia and the UK has kept the Australian dollar very strong against the pound.

UK – yesterday, a PMI survey, showed Britain's manufacturing sector shrank at its fastest rate in more than three years in July.

Australia – reported an improvement in retail sales and trade data.

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The Aussie dollar is slightly weaker today due to some weak Chinese data released (disappointing trade numbers in China).

 

China is Australia’s largest trade partner therefore any news from the region can affect the dollar.

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Over the past 2 days there has been some positive data for the UK (see below) – this has led to a slightly stronger pound against the Aussie dollar.

 

UK jobs - data which showed that 210,000 jobs were created in the three months to the end of June.

 

Retail sales figures released - UK retail sales rose 0.3% in July from the previous month according to official figures.

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The Australian dollar is weaker today following the miner BHP Billiton reporting a -35% drop in earnings and stated that there would be no major new projects initiated in 2013.

 

The minerals/mining business is key growth sector for the Australian economy therefore any negative news has an adverse affect on the dollar.

Edited by John from Moneycorp

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Aussie dollar weekly review is below, thanks.

 

The Australian dollar did not do quite as badly as the euro but it was a close-run thing. Investors ran away from the European currency in response to fading optimism that there would be any early resolution of the euro area's problems. At the same time they reduced their holdings of commodity-related currencies because of fading optimism for the global economy.

 

The Aussie suffered more than its peer group. It was not because of the week's Australian economic data, which were limited to new vehicle sales (6.4% up from a year ago) and leading indicator reading, which pointed to slower growth. The currency's weakness stemmed from concern that the mining boom has peaked and that consolidation, not growth, will be the new order. Local analysts are now looking for the Reserve Bank of Australia to lower its cash rate benchmark in coming months, perhaps to 3%. That changed outlook has dented investors' appetite for the Aussie.

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Hi all – please find an overview of Australian dollar over the last week, thanks.

 

To say the Aussie was the week's best performer is to exaggerate the scale of its achievement. In fact it strengthened by a cent and a half against the pound, rebounding by 1% from a three-month low. As much as anything the Australian dollar's recovery was a technical reaction to its earlier -7.5% fall.

 

The Australian economic data helped the Aussie moved higher. Business confidence improved by three points from -3 to zero while consumer confidence in October was 1% higher than in the previous month. Also helpful, though not unreservedly so, were the employment numbers for September. The good part was the 14.5k increase in the number of people in work, nearly four times as many as investors had bargained for. The bad part was the simultaneous rise in the unemployment rate from 5.1% to 5.4%. The combination puzzled investors but they eventually decided it was positive for the AUD.

 

Overnight, the Australian dollar has strengthened slightly. This is due to news from China with positive data released (their GDP figures) – these figures were better than expected and have eased concerns over a slowdown in the Chinese econom

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Over the past week, the Australian dollar strengthened by a quarter of a cent against the pound and by one cent against the US dollar. Against the New Zealand dollar it was down by three quarters of a cent.

 

Both the Aussie and the Kiwi dollar were helped by news from Japan. The new government there announced another package of stimulus, this one worth ¥10.3 trillion (£72bn). Investors believed it would mean more orders for Australian exports.

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Yet more bad news for the UK this morning – figures released show the UK economy shrank in the last 3 months of 2012.

 

The Office for National Statistics (ONS) said the economy contracted 0.3% in the October to December quarter. The economy had grown by 0.9% in the previous quarter.

 

There are worries that the UK economy could re-enter recession.

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Latest review of the past week is below.

 

The Australian dollar was unchanged on the week against sterling. Against the US and NZ dollars it lost a cent. Since the turn of the year the Aussie has strengthened by four and a half cents against the pound.

 

There were not many Australian economic statistics; just the obscure leading economic index, which strengthened to 0.6%, and the inflation figures. The latter were distinctly unhelpful to the Aussie because they were lower than expected. In for the last quarter of 2012 consumer prices increased by only 0.2%, half the forecast level, and in the year as a whole prices rose by 2.2% instead of the 2.4% predicted by analysts.

 

Investors fancy that the softer inflation readings will give the Reserve Bank of Australia room to cut its benchmark interest rate if it believes the economy needs a boost.

 

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A little review of the past week below.

 

The Aussie and the pound are unchanged against one another. Sterling covered a range of one and a half Australian cents without ever really threatening to head off in either direction.

 

Analysts cannot work out whether or not the RBA's 3% Cash Rate has further to fall but with it at that level for now, and with a triple-A sovereign credit rating, investors remain comfortable with the Aussie, keeping it strong, overvalued or not.

Edited by John from Moneycorp

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Some good news for the UK!

 

The economy has avoided falling back into recession. The Office for National Statistics preliminary estimates have been released this morning for gross domestic product (GDP) – it showed the UK economy grew by 0.3% in the first three months of the year.

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The Australian dollar has been much weaker against the pound recently - please see a review below.

 

A bad week for the Aussie saw it lose a cent to the pound and nearly two to the US dollar. From its long term highs in March and April it has fallen by -7% against the pound.

 

The -0.4% monthly fall in retail sales didn't help. Nor did the construction sector purchasing managers' index, which was down by four points at a seriously negative 35.2. The trade surplus looked good though, with exports up and imports down. Best of all was the 50k rise in employment and the downward tick in unemployment from 5.6% to 5.5%.

 

The trump card on the downside, however, was the Reserve Bank of Australia's decision to cut its benchmark interest rate from 3% to 2.75%. The decisions itself was not a surprise but many investors had expected the move to come in June or July.

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There has been a big shift in the GBP/AUD exchange rate with the Australian dollar weaker.

 

The Aussie dollar has weakened recently due to the cut in interest rates in Australia along with some concerns about the Australian and Chinese economies -the strength of the US-dollar has also impacted the Aussie.

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The recent rout of the Australian dollar has continued after disappointing growth data for the first quarter of 2013 was published by the Australian Bureau of Statistics. The Australian economy expanded at a slower rate than expected between January and March this year building the case for another rate cut by the Reserve Bank of Australia.

 

A strong economy, relatively high interest rates and robust demand for its natural resources from its main export partner China, had helped to underpin the strength in the Australian dollar in recent years; however these supporting factors are now beginning to recede. China is experiencing a slowdown of its own economy which will likely lead to a drop in demand for Australian exports.

 

Sterling on the other hand has been buoyed by a round of improving economic data releases so far this week. First came news that UK’s manufacturers had reported their highest activity levels in 14 months, next came the construction sector with a surprising return to growth driven by residential building. The best was saved to last with the dominant UK services sector reporting a surge in activity, delivering its strongest reading since March 2012. With all three sectors now growing for the first time for a year there are clear signs that the UK recovery is gaining traction.

 

It can be worth exploring the different options available to you when buying or selling Australian dollars – more information can be found here: http://moneytransfer.pomsinoz.com/various-ways-to-buy-currency.html

 

Thanks

 

John

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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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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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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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The Australian dollar is down this week and may rise up within couple of days and it all depends on trade and stock market and how they fluctuates on daily basis.

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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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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 influence the exchange rate.

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