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John from Moneycorp

The Pound vs Australian dollar

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The latest Aussie dollar review is below - thanks

 

The Aussie dollar was the top performer among the ten most-actively-traded currencies. It strengthened by nearly four cents against the pound and by five against the euro.

 

The Australian economic statistics were adequate rather than spectacular. 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 sent the currency higher. The Cash Rate reduction from 2.75% to 2.5% had been widely expected and the RBA indicated it had no plans for any further cuts.

 

Sterling was unable to keep up with the rebounding Aussie but the UK news and numbers were positive for the pound. The services sector reported the quickest expansion since 2006 and manufacturing and industrial output both delivered healthy increases. The Bank of England's long-awaited "forward guidance" revealed that the Bank Rate would only stay low as long as inflation remained in check.

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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 to 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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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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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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John, sorry but this thread reads like a one-man ad rather than a chat between expats...

 

Hi,

 

We provide this information to keep everyone informed on the latest currency news.

 

Moneycorp works closely with the forum and helps members save money on their overseas currency transfers.

 

Thanks

 

John

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The Australian dollar had a good week against the pound.

 

Why?

 

The Aussie was one of the top performers last week, strengthening by a cent and a quarter against the pound. It received help from news of stronger-than-expected Australian retail sales and purchasing managers' index (PMI) readings.

 

Another boost came from the Reserve Bank of Australia, which 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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The Australian dollar continues to weaken against the pound.

Why is the Australian dollar on a downward spiral at the moment?

Comments from Reserve Bank Governor Glenn Stevens saying Australian dollar remains "uncomfortably high".

News from the US - meeting minutes revealed US Federal Reserve policymakers expect to begin tapering economic stimulus ‘in coming months’.

China - disappointing manufacturing data released. China is Australia’s largest trade partner so any news like this can impact the Aussie dollar.

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Australia's cricket team had a far better week than its currency. The Aussie dollar was by far the worst performer, losing three cents to the euro, five cents to the US dollar and six to sterling.

 

With no useful Australian economic data to guide them, investors had to rely on the central bankers to give them direction. They got plenty, from the minutes of policy meetings at the Reserve Bank of Australia and the US Federal Reserve and from the mouth of RBA Governor Glen Stevens. The Federal Reserve offered a reminder that its money-printing stimulus programme would begin to wind down "in coming months", thus turning off the money tap that has been so helpful to the Aussie. Governor Stevens said he had "an open mind" about using intervention to weaken his currency, suggesting that the RBA might actually go ahead with it.

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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.

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Couple of areas to keep an eye out for, in terms of what could impact the GBP/AUD exchange rate over the next few weeks.

 

 

Situation in Europe - financial markets were nervous last week over concerns with some countries in Europe and their economic situation. Could potentially lead to 'risk off' sentiment and this could weaken the Australian dollar.

 

 

China's economy - if positive economic news is released then this typically strengthens the Aussie. Conversely, if negative then this weakens the dollar.

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