Foreign Currency Exchange

The overall sentiment for the Aussie dollar is still bearish, although this has not been enough to counter the antipathy surrounding Sterling like a storm cloud. The result of both of these forces have appeared to act in almost equal measure leaving the cross particularly range bound, especially when compared with some of Sterling’s other major crosses. The large shifts caused by Sterling weakness against the US Dollar and Euro have failed to materialise against the AUD with the cross oscillating around a 2% range for the last week.

The reasons behind the Aussie weakness are actually very similar to over here in the UK, with economists forecasting a near standstill 0.4% growth figure for Q3, a figure noteworthy for it’s similarity with a growth expectation in the UK not too long ago. Some of the key industries such as motor sales have been equally as hampered in Australia as here and are helping drive these figures, and indeed direct the bank of Australia towards potentially equally drastic monetary easing as seen in the UK. Overall we see the Australian economy as at least a few months behind the UK on the recession curve with their worst further away than ours. The Australian dollar is thus likely to retain it’s strength for a while longer and potentially weaken against the pound next year, as long as the UK economy does not fall by further than expected.