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Australian Dollar Exchange Rate Forecasts - GBP to AUD Firmer, Aus Drops vs US Dollar, Euro & NZ Dollar

September 15, 2014 - Written by Tim Boyer

The British Pound to Australian Dollar (GBP/AUD) exchange rate had been advancing higher so far this week following the significant weakening of the ‘Aussie’ against other majors.

The Australian Dollar has tumbled to a six-month low against the US Dollar (USD) following weaker than forecast Chinese data and growing demand for the American unit.

Conversely, the Pound has been able to gain some stability against other majors after softening greatly last week.

Sterling fell following Scottish poll results which suggested citizens were more in favour of independence than remaining part of the UK.

The latest Aus conversion rates can be seen below:

- The Australian Dollar to Canadian Dollar exchange rate is trading down -0.19% at 0.99734 AUD/CAD.
- The Australian Dollar to Euro exchange rate is trading up +0.33% at 0.69762 AUD/EUR.
- The Australian Dollar to Pound Sterling exchange rate is trading up +0.31% at 0.55601 AUD/GBP.
- The Australian Dollar to New Zealand Dollar exchange rate is trading down -0.16% at 1.10427 AUD/NZD.
- The Australian Dollar to US Dollar exchange rate is trading up +0.15% at 0.90252 AUD/USD.

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Australian Dollar Softer as Chinese Growth Slows

The Australian Dollar (AUD) frequently sees gains following the publication of positive Chinese data as China is its largest trading partner.

However, recent figures have denoted a slowdown in growth. Chinese Industrial Production has slowed in August year-on-year at 6.9%%.

This latest figure highlights the slowest growth in the industrial sector in the past six years, whilst other areas of the economy have also lost momentum.

Barclays commented: ‘This confirms a slowdown in growth momentum in the third quarter following the second quarter rebound.’ As a result Barclays have forecast that Chinese growth will only reach 7.2% in 2014, a revision down from their former 7.4% prediction.

Aus Dollar falls sharply versus the US Dollar

In recent weeks the Australian Dollar has tumbled versus the US Dollar quite dramatically. The ‘Aussie’ has fallen from its stubbornly high position at the 93/94 US cents marker to drop beneath 90 cents on Monday—the weakest level since March. Analyst Matt Simpson commented: ‘The Aussie’s grip above 90 US cents suddenly looks tenuous, starting badly with the Chinese data and not expected to get any easier throughout the week.’ The US Dollar has appealed to investors in the run up to the Federal Open Market Committee (FOMC) meeting on Wednesday, which many economists believe will give clarity on the present trajectory of a rise in borrowing costs in the US economy. However, some investors may buy the Australian Dollar again if the Federal Reserve remains dovish on the prospect of rate hikes. Simpson continued: ‘The “Greenback” has continued to strengthen as traders assume earlier rate hikes from the US. However, this also leaves room for disappointment if the Fed leaves traders high and dry, resulting in a “Greenback” selloff and support for the flailing “Aussie”.’

In recent months the Reserve Bank of Australia (RBA) has stated that it believes the Australian currency is overvalued and has attempted to jawbone the ‘Aussie’ down to help the economy expand. Strategist Andrew Lilley commented: ‘What is happening is that the Australian currency has started rebalancing to a level that would be consistent with better growth of the non-mining sectors in Australia. This is the type of move the Reserve Bank is looking for, where instead of low interest rates stimulating growth the lower currency does.’

Pound Exchange Rate Hindered by Scottish Referendum and BoE Meeting Minutes

The Pound has also softened in recent weeks as Thursday’s vote for Scottish independence is fast approaching. The Scottish referendum will cause severe tremors for the Sterling exchange rate against other majors as polls have indicated a close vote thus far. However, on a positive note, Monday has seen the release of a favourable Rightmove House Prices Index . UK property prices jumped in value in September, rising by 0.9%, far stronger than Augusts’ contraction of 2.9%.

The Bank of England is also due to release its latest Meeting Minutes on Wednesday which will detail the most recent vote by Monetary Policy Committee (MPC) members regarding rate hikes. After much speculation in recent months, the previous Meeting Minutes showed the Bank of England finally had its first split vote since 2011 on the subject of borrowing costs. The announcement offered some support to the Pound as investors began to account for rate hikes in the future. This week may see Sterling bolstered further if another split vote occurred—however, if this proves not to be the case the UK currency may lose some footing again.

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