Pinch and a punch! It's October 1, which means it's the time of year where both Coles and Woolies have a weird mix of Halloween and Christmas decorations available. Foreign exchange markets are equally as confusing as this mix of decorations; however, that is kind of a year-round thing that we can't just attribute to October. The Aussie dollar saw slight upward pressure over the weekend, making small gains against all major currencies except the Canadian dollar. With this in mind, one AUD will buy you:
0.6565 US dollars
69.7715 Japanese yen
0.594 Euros
0.528 Great British pound
0.8404 Canadian dollars
1.0407 New Zealand dollars
0.879 Singapore dollars
Around the grounds - foreign exchange edition.
Australia
Today at 2:30 pm, the Reserve Bank of Australia (RBA) will release their October interest rate decision. The market is currently pricing in (expecting) an 80% chance of a 25 basis point cut, which will bring the official interest rate down to 0.75%.
The Aussie economy is seemingly struggling as the unemployment rate continues to increase. This does not bode well for wage growth and, in turn, retail spending and inflation. The RBA believes an underperforming economy requires policy support, which in this instance is a potential decrease to interest rates. At its most basic level, lower interest rates mean people will have more money to spend elsewhere, thus helping inject funds into the currently slowing economy.
If the RBA doesn't cut rates, there could very well be a spike in the value of the Aussie dollar. While this is ideal if you need to exchange some AUD to foreign currency, it is undesirable for the Australian economy at this point in time.
With this in mind, if you need to purchase foreign currency, we recommend adding Rate Move Guarantee to your purchase in-store. It's free, and if the rate improves within 14 days we will refund you the difference!*
This evening, RBA governor Philip Lowe is doing a speech which could provide further insight into the future of interest rates in Australia.
USA
The trade war between the U.S. and China continues to tick along. As expected, there have been no significant positive developments.
With that in mind, there have not been any crazily terrible developments either, which is good news. On Friday, Bloomberg reported that the U.S. was considering imposing restrictions on U.S. investment on Chinese companies. However, the Trump administration issued a denial saying "the administration is not contemplating blocking Chinese companies from listing shares on U.S. stock exchange at this time".
The original report from Bloomberg put downward pressure on the value of the USD; however, it soon rebounded after clarification from Trump's government.
China is currently in the midst of celebrations for the 70th anniversary since the founding of the People's Republic of China, so there won't be much progress or news regarding the trade war this week.
Brexit
With only 31 days until the current Brexit deadline, the U.K. government has reportedly completed a draft withdrawal agreement that they plan to present to the E.U. later this week. This news has given the pound a slight boost after weeks of uncertainty-driven downward pressure.
The U.K. government is expected to release more information about these plans to the public later this week before meeting with the E.U. to negotiate both the deal and a potential extension to the current Brexit date. Bloomberg reports that the new agreement suggests creating ''customs clearance zones'' in Northern Ireland and Ireland as an alternative to the controversial Irish backstop.
In the meantime, opposition M.P.s are still not keen to support a general election or table a no-confidence vote against current Prime Minister Boris Johnson until the E.U. grants a Brexit date extension to eliminate the chance of the U.K. crashing out of the E.U. on October 31.
It's refreshing to hear that the government has made progress on drafting a new agreement after months of flogging the old one despite no-one being happy with it. Whether the E.U. and wider M.P. approve this new agreement is another story and one that we will no doubt hear about over the next few weeks.
This blog is provided for information only and does not take into consideration your objectives, financial situation or needs. You should consider whether the information and suggestions contained in any blog entry are appropriate for you, having regard to your own objectives, financial situation and needs. While we take reasonable care in providing the blog, we give no warranties or representations that it is complete or accurate, or is appropriate for you. We are not liable for any loss caused, whether due to negligence or otherwise, arising from the use of, or reliance on, the information and/or suggestions contained in this blog. All rates are quoted from the Travel Money Oz website and are valid as of October 1 2019. Terms and conditions apply to Rate Move Guarantee.
