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Hi All,

Here is an update of what’s been happening in the Currency Markets throughout December with the Aussie Dollar.
GBP/AUD headed back below the psychological 1.80 at the beginning of December, with the AUD supported after Australia’s Central Bank raised interest rates for a record third successive month. The Reserve Bank of Australia lifted its key cash rate by 25 basis points to 3.75% and called its three hikes a ‘material adjustment’, but offered no guidance for further moves. This increase in rates renewed demand to buy up AUD to achieve a higher yield than currently available from other major currencies.

The Aussie found further support as new vehicle sales surged in November, with SUV sales alone up 44% on the year, showing consumers were clearly confident enough to splash out of big-ticket items despite rising interest rates. Government figures showed retail sales as a whole rose 0.3% in October to a four-month high of AUD19.75 billion, up some 5.6% compared to the same month last year.

The Australian Industry Group’s Construction Index (47.6) slipped back under 50
showing contraction, as new orders and employment dragged. Overall Job Advertisements (+5.2% m/m) continued their steady rise in November after dropping in July, however levels remain 34.2% lower than a year ago. The NAB Business Confidence (+3 to 19) survey confirmed the improving jobs outlook as businesses were able to stay upbeat despite a tightening monetary policy environment.

Finally, to cap a generally positive couple of weeks of data, the Unemployment Rate (5.7%) and Employment Change (+31,200) both substantially beat market forecasts and increased the probability of another rate hike at the next RBA meeting in February. Furthermore, RBA deputy director made a few interesting comments that inferred economic indicators were pointing towards prolonged stability within the economy. Other than that, the holiday season meant other key data was thin on the ground.

Central bank rates:
UK: 0.50%
Australia: 3.75%

High & Low of the month:
High: 1.8306
Low: 1.7704
% movement: 3.40%

Difference of cost on a £200k property:
So a difference of 12,040 AUD


Whilst FX isn't the most thrilling of subjects, the sooner you begin to think about your money transfers, the more likely you are to make your money go further.

Regards,

Jon Sermon
HiFX
 
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