Foreign Currency Exchange

Last week the Aussie Dollar lost a lot of ground against the Pound and reached a seven month low against the US Dollar. With fresh concerns over slowing global growth, risk aversions has been raised and therefore those who have been profiting from carry trades have pulled their investment from the currency, resulting in the Aussie Dollar losing ground.

The same concerns over global growth have pushed commodity prices down, putting further pressure on the currency as Australia is one of the world’s major exporters of natural resources. Reaction to the gloomy outlook came through the Deputy Governor ‘Ric Battellino’ who commented that the Reserve Bank of Australia were keen to act by cutting rates before inflation declines sharply.

The Aussie Dollar is expected to remain under pressure as the mass unwinding of carry trades continues. However, despite the poor Dollar outlook the GBP/AUD cross is expected to push back in the Aussie’s favour as the Pound struggles under pressure of an interest rate cut. Therefore for those with an immediate need for Aussie Dollars, it might be wise to take advantage of the short term gains in the market. Whilst for those who perhaps need Australian Dollars in the future, the dramatic favourable movement in the market means that one can now buy forward at better rates of exchange than you could have bought on a spot contract only a few weeks ago.