23rd April 2019
After a nice run at the top of its recent trading range, the Aussie dollar has drifted a little lower over Easter. Maybe the effects of a chocolate sugar high are wearing off or perhaps the low trade volumes over the Easter long weekend led to some slight downward pressure. Either way, today one Aussie dollar will buy you:
0.6939 US dollars
76.3667 Japanese yen
0.5284 Great British pound
0.8955 Canadian dollars
1.0297 New Zealand dollars
0.9122 Singapore dollars
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Last week the AUD/USD lifted above the 200-day moving average for the second time in 12 months. This came off the back of better-than-expected Gross Domestic Product (GDP) data for China in Q1. The increase was further supported by a relatively strong report on the Australian labour market in March, allowing the AUD to end the week on a high.
The Aussie dollar saw some downward pressure during the Asian trading session, which means we can likely attribute the AUD’s decrease to weaknesses in Chinese stocks and the Chinese yuan. The Australian economy is impacted by China due to our strong trade ties, so a decrease in the value of the CNY or a slowdown in the Chinese economy can lead to negative flow-on effects for the AUD.
Aside from that, the long weekend wiped out two days of trading in Australia. Whilst America traded on Monday, there were no major economic releases or headlines to otherwise impact the value of the Aussie dollar against the USD.
Markets anticipate Aussie Consumer Price Index report
Wednesday will see the release of the Q1 Consumer Price Index (CPI) report for Q1. It is expected that Australia’s annual inflation will decline from 1.8% to 1.5% due to the decreased prices of oil.
Should this number be worse than expected, it could have negative effects on the value of the Aussie dollar, meaning less money for Australian travellers heading overseas. If you are planning a holiday soon, avoid the brunt of exchange rate movements by adding Rate Guard to your purchase in store. If the rate improves within 14 days we will refund you the difference*.
Markets await USA Gross Domestic Product estimates
This week will also see the release of estimates of the USA’s GDP in Q1 of 2019. If the estimates are better than market expectations, the USD could benefit. This would not be great news for the AUD, especially if our Aussie dollar also gets hit by poor CPI data.
There have recently been some upward revisions of the US GDP after stronger than expected trade data in March. With this in mind, markets aren’t expecting results to be significant enough to push the USD out of its recent trading range. Plus, a boost to GDP might not offset current market expectations around slowing economic growth in the US for the rest of 2019.
What does this mean for the AUD and Aussie travellers? Well, if our CPI data is worse than expected and US GDP is better than expected, it could put some gnarly downward pressure on the value of our little Aussie battler dollar. If the reverse happens, we could see the opposite effect, which would be great for those getting ready for a mid-year jaunt overseas.
At the end of the day, we can’t predict what is going to happen, but do recommend you keep an eye on the news and financial markets so you can purchase your travel money when the Aussie dollar is doing well.
Nothing has happened with Brexit, but we will give you an update anyway
The United Kingdom was supposed to leave the European Union almost two weeks ago on the 12th of April. Instead, the UK got another extension so they could sort themselves out with some kind of withdrawal agreement.
Since then, talks have continued between government ministers and members of the opposition. They have yet to agree on a withdrawal deal or table any new offers or plans. These talks were put on hold over Easter so that everyone could drown their Brexit induced sorrows in an easter egg or 10.
When talks resume, it is likely that members of the opposition will focus more on the removal of Theresa May from her role as Prime Minister then the actual Brexit withdrawal agreement.
With an extension until the 31st of October, we expect to be reporting of a few more ‘talks’ with no resolution. Buckle in, let’s pray we can celebrate a conclusion to Brexit with Halloween candy in October.
Definitions for those of us playing at home:
A trading range occurs when security, or currency, is traded between consistently high and low prices for a certain period of time. For example, if the AUD/USD cross did not go higher than 0.7109 or lower than 0.6903 for a period of time, that would be its trading range. If a currency breaks out of this trading range, either positively or negatively, it means there could be momentum building.
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