Welcome to the Pure FX account of the latest changes in the foreign exchange rates.
This is intended as a brief guide to movements in the exchange rates over the weekend, to put you in the best position for when you exchange currencies.
The Aussie climbs again! The Australian dollar pulled almost a full cent from the UK pound over the weekend, as did the New Zealand dollar, as reports the United States expanded 2.0% in Q3 helped boost foreign exchange sentiment.
The US grew 2.0% between July and September on an annualised basis (which means, to get quarterly growth you divide by four), ahead of forecasts for 1.9% growth and far higher than Q2’s 1.3% figure. Encouragingly, this was chiefly driven by an increase in consumer spending, which also rose 2.0% in the three month period.
This report boosted the Aussie and New Zealand dollars because they’re commodity currencies, and so highly receptive to changes in global sentiment. If there’s good global economic news, such as reports that the world’s largest economy expanded more than forecast, they’ll climb, and vice versa.
RBA intervenes to weaken the Aussie
However, it’s worth pointing out that these Australian dollar gains may not last. This is because, over the weekend, a new report showed that the Reserve Bank of Australia is intervening on the foreign exchange market, to purposefully weaken the Aussie currency.
The RBA bought $AU 863m in foreign reserves in the last two months, compared to just $AU 49m in the whole of Q2. This signals the Reserve Bank is becoming serious about combating Australian dollar strength, including selling the currency in vast amounts, to reduce its value. As Andrew Salter at ANZ Bank writes, this “is a clear signal of a change in the RBA’s view and intentions.”
If the central bank grows yet more serious in its attempt to weaken the Australian currency, we could see it fall in the coming weeks. If you intend to buy the Aussie, that would hence be to your benefit, as you would be able to obtain a higher Australian dollar total when you exchange currencies.
Find Out More
I do hope you’ve enjoyed reading this post. To find out more.
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