I'm officially back in Melbourne after a two week honeymoon in Bali and despite two bouts of gastro/food poisoning I persevere. In the two weeks I was away we saw the U.S Federal Reserve raise interest by 25 basis points to 0.75%, the RBA maintain rates at 1.5% while equity markets in the U.S hit fresh all time highs. Commodity prices have also continued to fair reasonably well with the likes of copper, iron ore, coal and nickel all looking pretty good.
The Aussie dollar however has not fared so well over the past 2 weeks, in fact AUD/USD has fallen just on 2.5cents to be trading below 0.7250 this morning, while AUD/GBP and AUD/EUR have also retreated from higher levels reached last week.
As we head into the Christmas/New Year period its important to note that despite little economic data to move markets, thin liquidity as a result of local and international holidays typically sees increased volatility in currency markets. In addition if we are to look back in history, the first few weeks of January this year as many of you will recall saw AUD/USD fall a whopping 5 cents between Jan 1 and Jan 16 - and a similar pattern has emerged in the January if you look even further back over the past 4 years. With that said history is just that and by no means can I categorically say AUD/USD is destined to fall further in Jan, but if you have largish payments coming up and you are concerned hedging is your best bet to lock in profits on your imports.
DATA RELEASES TODAY:
AUD - Monetary Policy Minutes at 11.30am
AUD EXCHANGE RATES:
AUD/USD – 0.7234
AUD/GBP – 0.5847
AUD/EUR – 0.6968
AUD/NZD – 1.0454
AUD/JPY – 84.843
***Above rates are indicative wholesale rates and intended as a guide only***
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Senior Corporate FX Dealer
Phone Patrick - 0431 278 632