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Australian Dollar Exchange Rate Forecast: USD/AUD Climbing, GBP/AUD Softer

February 12, 2019 9:25 am | Modified February 12, 2019 9:26 am
AUD, GBP, INR, USD | BY Lauren Bessent

The Australian Dollar to Pound (AUD/GBP) and Aussie to US Dollar (AUD/USD) exchange rates have experienced an interesting few sessions of late. On Monday, the Aussie fell against the US Dollar (AUD/USD) to reach its lowest level since the start of January. In comparison, the US Dollar has been on a winning streak, rallying for the last nine trading sessions. Meanwhile, the Pound Sterling exchange rate was dented by Brexit uncertainty and economic data which showed UK growth had slowed. UK manufacturing also slipped into recession.  

Australian Home Loans Sink — Australian Dollar (AUD/USD) Exchange Rate Hits Lowest Level Since January

Overnight, economic data showed Australian Home Loans sank in December, by far more than economists had forecast. The December figure was expected to contract by -2.0% after November’s -0.9%. However, the actual reading came in far lower, at -6.1%. The Australian Bureau of Statistics (ABS) believes the decline on the year stands at 13.2%.

ABS Chief Economist Bruce Hockman commented:

‘The slowdown in lending for investor dwellings this month continues the steady decline over the past two years, with the value of new investor loan commitments down around 40% from the peak at the start of 2017. The slowdown in lending for owner occupier dwellings is more recent, with falls concentrated in the last half of 2018.’

The falls in housing loans represent a number of underlying issues, such as less overseas investment, stricter loan lending guidelines and potentially a fall in confidence. However, with the upcoming federal election, there may some tax changes on the horizon.

Managing Director of BIS Oxford Economics Robert Mellor commented:

‘The slowing in demand from both owner-occupiers and investors reinforces weaker consumer confidence in the property market and confirms slowing is across the board, not just among investors but also upgraders and first home buyers.’

Pound, Australian Dollar, Indian Rupee Exchange Rate Forecast

It’s a relatively quiet day for economic data, but Bank of England (BoE) Governor Mark Carney will be speaking in London this afternoon which could create some GBP exchange rate movement. Any positive news in Brexit could present the Pound with a relief rally. Today, Theresa May will address parliament a day early, essentially to seek permission to continue on with her current brinkmanship tactic.

In the US, another government shutdown has been averted after a compromise was met on Trump’s border wall with Mexico. Some funding was released for fencing, but not anywhere near the amount Trump had been demanding. Markets saw the stability as a positive and the Dollar was offered some support.

RBI Cuts Interest Rates for the First Time in 18 Months

Meanwhile the Indian Rupee climbed on Monday against the US Dollar (INR/USD) after the Reserve Bank of India (RBI) announced it was cutting interest rates by 25 basis points, in the first cut in 18 months. The last RBI Governor had been uninterested in revising rates lower as a growth versus inflation debate took hold, but the new Governor has had some success presenting the benefits of a different policy path to policymakers.

Today, the Pound to Australian Dollar (GBP/AUD) exchange rate is trending at 1.8134. The US Dollar to Australian Dollar (USD/AUD) exchange rate is trading at 1.4118.

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