It’s been a quiet start to the week for foreign exchange markets, with the US having their Martin Luther King Day holiday on Tuesday. With this in mind, one Aussie dollar can buy you:
What’s happening in global markets
The biggest story influencing markets this week is the International Monetary Fund (IMF) downgrading their global growth forecast for the second time in three months.
The downgrade was from 3.7% (Octobers forecast) to 3.5%. In July this forecast was 3.9%. The reduction in growth expectations came mainly as a result of Eurozone activity, particularly France, Italy and Germany. Germany, considered a powerhouse economy in the Eurozone, was downgraded by a pretty significant 0.6%.
The IMF also stated that risk in the global economy remain skewed towards weaker growth as trade tariffs continue to be enforced, financial conditions continue to tighten, China continues to experience an economic slowdown and if Brexit results in a ‘no deal’.
Long story short, the global economy is weakening at a much faster rate than expected and the world is at risk of a sharp downturn. Not the nicest thought, we must admit, but at least we’re all in it together? All for one and one for all?
The US government shutdown is also still happening, now into day 32 with no end in sight. President Trump offered to temporarily extend protections for young undocumented individuals brought into the States as children in exchange for border wall funding, however, the Democrats called it “unacceptable” and “inadequate”.
Chinese gross domestic product (GDP) was released this week, showing the economy has grown by 6.4% in the year up to December.
Whilst this number might sound pretty impressive, it is actually the lowest level of growth in 28 years and a long way away from the double digit growth seen from 2003 - 2007. 2003 saw the beginning of the mining boom and the Aussie dollars’ significant increase against almost all other currencies.
These days are well behind us now, and these figures are a strong reminder of how important Chinese economic activity is for the performance of the Australian economy and the strength of its dollar.
It’s no surprise that Brexit
is still the key influence on the value of the Pound. After British MPs rejected Prime Minister Theresa May’s Brexit deal last week, she has been working to provide a ‘plan B’.
MPs are due to vote on this new deal next Tuesday, 29th Jan. Despite not providing many details on how it would be changed, it is expected to address changes in the Irish border. May has also removed the £65 fee EU citizens were required to pay in order to continue living in the UK after Brexit.
As Brexit continues to cause fluctuations in the value of the pound against the Aussie dollar, we recommend adding Rate Guard to your purchases in store for added peace of mind. It’s free, and should the rate change within 14 days of purchase we will refund the difference*.
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All rates are quoted from the Travel Money Oz website, and are valid as of 22 January 2019.