Latest Specific Currency Report - Sterling Vs. Aussie Dollar - 16/06/10
There's not been much to drive the markets in terms of economic data. Home loans and consumer confidence were down slightly in Australia, while in the UK the trade deficit widened in April, and industrial production data released on Friday showed a 0.4% decline. The Bank of England kept interest rates at record lows as expected, with most analysts now expecting no change in 2010.
Today's chart shows just how volatile the foreign exchange markets can be. Sterling gained 10% against the Aussie dollar over a five day period in mid May, and has been gyrating around in a 9 cent range since then. We managed to make new highs last week, falling just shy of 1.79. We then went on to lose eight cents in just a few days. So it's a hard fought battle, but at the moment the Australian dollar is winning through as stock markets around the world continue to recover from a severe bout of the jitters and investors move money into higher yielding / higher risk assets.
At the risk of repeating myself, than means the Australian dollar benefits as traders buy it for its mouth watering 4.5% interest rate! Sterling has fared well against the bedraggled Euro over the last few weeks, and also against the US dollar which tends to sag when investors are looking to take on more risk. However, the pound has met its match with the Aussie, and if investor risk appetite continues to improve we may see this exchange rate hitting new lows before long. Clients with a requirement to buy Aussie dollars should strongly consider taking advantage of the current rate.
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