close menu

Is this the end of AUD rally?

by 1st Contact | Apr 28, 2016
  • Over the past four months the strengthening of the Australian Dollar against major global currencies has exceeded the expectations of most analysts. During mid-April the AUD hit 22 month highs against both the GBP and USD. However, recent inflation data released by the Australian Bureau of Statistics (ABS) has forced many to question whether the bull-run is at an end.
  • 95_Is-this-the-end-of-AUD-rally

    The ABS surprised markets on Wednesday by announcing a sharp fall in inflation. Given the target rate of between 2.0 to 3.0%, the recent 1.3% print means there has been a notable downward shift in the perceived health of the national economy.

    While the perils of high inflation are well documented, low inflation can also be equally harmful to a nation’s economy. Low inflation often leads to lower consumer spending and economic growth. As a result of this, unemployment rates generally rise. Although low inflation has been commonplace within the Eurozone and North America, this is the first time Australia has recorded such figures since December 2008 and it coudl put pressure on the AUD.

    Monetary policy is the conventional tool used to address low inflation, so attention will turn to the next Reserve Bank of Australia announcement. At an already historic low official cash rate of 2.00%, any further rate cut would lead Australia into uncharted territory.

    - Jason Chown

    To transfer money in or out of Australia, for business or personal reasons, email Jason or give us a call on either +61 (1) 800 039 300 (Aus) or +61 (3) 8651 4500 (Intl). For more information, you can visit the 1st Contact Forex website.

    • medical-cross-and-heart
      The NHS vs Medicare: Which is better?
      Jan 30, 2018  |  by 1st Contact
    • big-ben-london-at-night
      What is the cost of living in London in 2018?
      Jan 25, 2018  |  by 1st Contact
    • house-key
      To rent in the UK, you absolutely need to have the right to rent
      Jan 19, 2018  |  by Leanne Shrosbree
    • man-making-more-money
      This is how contractors can take home more cash
      Jan 09, 2018  |  by Kobus Van den Bergh
    • airport-waiting-takeoff-plane
      5 pro tips for surviving your long-haul flight
      Dec 19, 2017  |  by Kobus Van den Bergh
    • young-friends-drinking-beer-at-pub
      10 interesting facts about the UK working holiday visa
      Nov 27, 2017  |  by John Dunn
    • big-ben-on-union-jack
      How long it will take to qualify for ILR in 2018
      Nov 23, 2017  |  by John Dunn
    • blog autumn budget summary
      Autumn Budget 2017: Summary points
      Nov 22, 2017  |  by Scott Brown
    • couple-marriage
      Getting married in the UK? You may need a Marriage Visitor visa
      Nov 21, 2017  |  by John Dunn
    • isle-of-skye-uk
      The top 10 places to visit in the UK (that are not London)
      Nov 08, 2017  |  by Leanne Shrosbree
     
     

    Do you like cookies? We do, read why.