Happy Friday, fellow travellers and foreign currency enthusiasts. I'm currently writing this on a plane to New York where I plan on visiting Wall Street and taking a picture with the famous charging bull! I know what you're thinking - how will I sleep tonight? My excitement levels are way too high.
If you're like me and are currently travelling, or planning on jetting off soon, you'll be stoked to hear that the Aussie dollar has appreciated against several G10 currencies include the US Dollar (I'm spending my extra travel money on at least five slices of pizza and maybe some New York cheesecake, how about you?). With this in mind, one Aussie dollar will currently buy you:
Did you already buy your foreign currency and miss out on today's improved rate? Or perhaps you're unsure when to buy in case the AUD sees another improvement? No stress, just add Rate Move Guarantee to your purchase at any Travel Money Oz store. It's free, and if the rate improves within 14 days, we will refund the difference*.
So why has the Aussie dollar appreciated?
A few reasons, however, the most significant factors would be improved global market sentiment and some seemingly solid trade war news. Polls have also just closed for the UK general election; however, we won't know the final result for a while yet. I've got time to kill on this flight, and the lack of wifi means I can't scroll through pictures of New York food inspo, so we may as well dive a bit deeper into these elements.
Trade War News
US President Trump tweeted that the US and China are very close to signing a 'big trade deal'. This 'uge trade deal has supposedly been reached and written and is just waiting for Trump's signoff. It is expected to be part of the 'phase one' trade deal as opposed to the larger trade agreement.
While markets are unsure of what the deal will include, many expect it will involve the USA abandoning Sunday's scheduled tariff increase on Chinese imports and addition to rolling back tariffs already in place.
Should Trump sign off on the deal, it is an excellent step in the right direction, and a relief to the Aussie dollar, which has recently been weighed down by uncertainty surrounding the conflict. China is our biggest trading partner, and the weight of increased tariffs on the Chinese economy was filtering through to Australia. This news has encouraged not only appreciation in the AUD, but also the Chinese Yuan and New Zealand dollar.
Fingers crossed the deal is signed off in the next few days so that we can all take a sigh of relief and enjoy a few weeks without any trade war news before they resume further trade and technology discussions in 2020.
Improved global market sentiment
Positive trade war news has added to a positive economic outlook that was alluded to by the Federal Open Market Committee (FOMC), a committee within the Federal Reserve System (the Fed). Yesterday the FOMC indicated they were more confident about the state of the US economy and removed a previous reference to "uncertainties" in the market.
The European Central Bank (ECB) mirrored this tone when they kept interest rates on hold and maintained their stance on the state of the economy.
This positive global outlook has boosted market confidence and helped put upward pressure on the value of the Aussie dollar. While the Australian domestic economy still isn't in the most exceptional shape and we certainly aren't entirely in the clear, this is all very positive news for travellers exchanging their AUD for holidays over the festive break.
UK General election
Today UK citizens hit the polls in what has been dubbed one of the most critical elections of the decade due to Brexit. After a few weeks of the Conservatives having a clear majority in polls, a poll released at the start of the week showed a majority of 28 seats is most likely. It's also worth noting that this particular poll has a margin for error of +/- 28 seats. Lol.
Anyway, after a tumultuous day of voting, the exit poll released when polls closed earlier this morning suggest Boris Johnson’s Conservative party is set to win a clear majority. Of the 650 seats available, a total of 326 is required to form a majority. The exit poll suggests Boris' party will snag 368, which is more than enough to claim a substantial majority.
Should this be the case, the GBP is expected to see some upward pressure as it is almost certain Boris will 'get Brexit done' by January 31 2020. His new government majority would allow proceedings to run quite smoothly to get all of the relevant deals and legislation passed with far less tension then we have seen in the past.
If the poll is wrong and Johnson doesn't secure a majority, well who knows what will happen. Only time will tell as votes are counted.
Just imagine if Boris got in, and Brexit was pretty much settled, AND the trade war was signed all in the same week – the week that I am in New York!! Alicia Keys was right; this city is the concrete jungle that dreams are made of.
If you're travelling soon, especially to the UK, it's worth keeping an eye on the results of the election and developments in the trade war. They are likely to have the most significant effect on the value of the Aussie dollar and the amount of travel money you'll be taking on your holiday.
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