Australian Dollar falls again

The Australian Dollar lost almost one US cent today to close at its lowest point this year.

The Australian Dollar was trading at 85.61 US cents, down from yesterday's close of 86.53 US cents.

It is the second time this year the Australian dollar has closed the local trading day below 86 US cents, closing even lower than the previous 85.95 cents finish on January 22.

Commonwealth Bank currency strategist Joseph Capurso said a stronger US dollar was the major factor behind today's fall.

The Australian dollar has lost 13 per cent since hitting a 25-year high of 98.49 US cents on July 16 - levels not seen since the days of a fixed exchange rate.

Mr Capurso said the decline was one of the fastest in the currency's history, having slid in almost a straight line since.

"As soon as it hit that, it's spent most of the time falling," Mr Capurso said.

"It's been one hell of a fall for the Aussie dollar."

Mr Capurso said he expected it to be buoyed by new economic data over the next fortnight, and described the slide as temporary. "We think the market is going to be surprised about the resilience of the Australian economy, so we think that the Aussie will find some support," Mr Capurso said. Commonwealth Bank has forecast the dollar to reach 90 US cents by December.

Full story at news.com.au

Pounds to Australian Dollars exchange rate is currently 2.1500

Good news for those with Australian Mortgages

What can be only seen as good news for those with Australian Mortgages or the need to Buy Australian Dollars the Reserve Bank of Australia gave the strongest indication that interest rates will be cut in the coming months.

Today the Pounds to Australian Dollar exchange rate is trading at 2.14000 to Buy Australian Dollars

THE minutes of the Reserve Bank's August board meeting have all but confirmed there will be an interest rate cut next month.

But the minutes gave little encouragement to market speculation that the central bank could cut the official cash rate by 50 basis points, economists say.

The minutes of the meeting, at which the cash rate was left unchanged at at 12-year high of 7.25 per cent, said "a case could be made for an early reduction in the cash rate".

Board members were conscious that financial conditions were "clearly quite tight and effectively getting tighter as a result of ongoing pressure on lenders cost of funds in the market", the minutes said.

"Given there had been a significant change in borrowing behaviour, confidence was weaker, asset prices had declined and slower overall growth was in prospect, tighter financial conditions were not warranted," the minutes said.

"Indeed, less restrictive conditions could soon be called for, otherwise the risk of a deeper and more persistent slowing in the economy would increase."

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The Australian Dollar continues to struggle

The Pound to Australian Dollar exchange rate continued its march towards 2.2000 as gold prices fell below the $800 mark for the first time in years, the expectation that the RBA is going to cut interest rates soon and that Foreign Exchange Traders are dumping their carry trades (selling Australian dollars and buying back Japanese Yen) a very similar story to what is happening to the New Zealand Dollar.

This is good news if you are going to buy Australian dollars in the coming weeks as the 2.20/2.30 becomes an achievable exchange rate again and no longer seems like a pipe dream it did only 6 weeks ago. Foreign Exchange markets do deliver swift justice.

Although there is no good news for the Pound which looks like it is heading below 1.8000 and may even head towards 1.7000 to 1.6500 as the endless bad news fails to hault the selling.

If you do need to Buy Australian dollars and looking for the best exchange rate

contact us and we will help you achieve the best exchange rate possible

Bye for Now

IMS Foreign Exchange

Australian Dollar fights back against the Pound

The Pound to Australian Dollar exchange rate hit a high of 2.2000 last night almost a 10 percent improvement of the years low. But for Expats and those migrating to Australia the relief was short lived as the Pound continues to crumble due largely to Pound to US Dollar exchange rate playing catch up to the recent moves in other currencies against the US Dollar and worsening economic conditions plummeting as inflation hits 5 percent. Added to the Pound's woes was Barclay's announcement today that it has moved forward its time frame for the Bank of England cutting rates later this year as the UK economic conditions continue to weaken .

We tend to agree with Barclay's that if Bank of England stays focused on inflation - growth and consumer confidence will tumble and the recession will become a certainty.

In Australian local financial news the Commonwealth Bank of Australia announced its annual profit by 7 per cent and forecast the local economy to grow modestly amid continued headwinds from the global credit crunch.

Net profit for the year ended June 30 rose to $4.791 billion while the bank's preferred measure of profitability, cash earnings, rose 4.6 per cent to $4.733 billion.

Yet again banks not understanding why we complain about services, fees and interest rates on our Australian Mortgages. They seem to be oblivious to the consumer and the consumers needs.

A rant for another day.

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Australian Dollar has fallen for 11 straight days

The Australian Dollar has fallen for 11 straight days for the longest losing streak since 1975 and to a 6-month low, according to Bloomberg. It is losing ground not only because of commodity price declines, but also the outlook for further Australian Interest Rate Cuts.

Bloomberg says “The Reserve Bank of Australia said yesterday that a ‘significant moderation’ in domestic demand would give it room to lower borrowing costs…

Foreign Exchange Traders are certain the RBA will lower its 7.25pc base interest rates by at least a quarter-percentage point when it meets next on Sept. 2,” according to the Credit Suisse swap analysis. The RBA will cut by a total of 97 bp over the next 12 months, or effectively 1%. In July, the analysis called for cuts of half that.

This makes the Australian Dollar less desirable against its commodity-currency competitor, the Canadian dollar, where policy decisions are more closely tied to those in US and thus already at relatively low interest rates.

Bye for Now

Barbara Rockefeller

For the best exchange rates when Buying Pounds to Australian Dollars visit

IMS Foreign Exchange

Australian Dollars Fall

The Reserve Bank of Australia’s quarterly statement on monetary policy yesterday hinted that the RBS is finished hiking interest rates and in fact now looking towards maybe cuting the Australian Base Interest Rates in the coming months which will be a relief to those who have or want a Australian Mortgages.

The fall of the Australian Dollar has been fairly spectular as the Pounds to Australian Dollars exchange rate has gone from 2.0200 to 2.1757. If it goes through the 2.18/2.200 level we could see the Australian Dollar fall off a cliff and head back towards its natural comfort zone of 2.5000 which would make all the british expats including this one very happy.

Pounds to Australian Dollar exchange rates is currently trading 2.1708

Bye for Now

IMS Foreign Exchange

Australian Interest rates kept on hold, cuts predicted

Interest rates kept on hold, cuts predicted

AS expected, the Reserve Bank has kept official interest rates steady today at a 12-year high of 7.25 per cent, in line with expectations. The decision was widely tipped, with all 19 economists surveyed by AAP expecting the RBA to leave the cash rate steady.

Reserve Bank governor Glenn Stevens indicated in a statement that while the board felt it was appropriate to keep rates steady this month, relief could be in sight.

"Weighing up the available domestic and international information, the board judged that the cash rate should remain unchanged this month. Nonetheless, with demand slowing, the board’s view is that scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing," he said.

Interest rates 'won't go higher' ANZ chief economist Saul Eslake said the statement give a clear impression that interest rates have peaked. "That's an indication not only that there aren't going to be any more increases in interest rates but raises the question of when do they cut," Mr Eslake said. "The statement does not give any clues as to when that might be."

The central bank reaffirmed its forecast for inflation to fall back within its 2 to 3 per cent target band during 2010. Mr Eslake said moves this year by commercial banks to raise their borrowing rates independently of RBA decisions has been a "critical factor altering their thinking" about the economy.

"Additional rises in market interest rates and tougher credit standards have delivered some additional tightening of financial conditions without them having to lift a finger," Mr Eslake.

"That's clearly had some impact on the economy."

Rates cut by Christmas?

Lehman Brothers chief economist Stephen Roberts said Mr Stevens' statement about a "less restrictive" monetary policy stance had increased the possibility of an interest rate cut by the end of 2008.

"There could be one by Christmas - they're going to wait for more data," he said.

"They've got an easing bias but there's no timing on that ... they're not in a particular rush to change.

"They talk about uncertainty weighing on both inflation and growth."

Mr Roberts, who is forecasting rate cuts in the March quarter, said the RBA would not move on interest rates until at least after the October 22 release of September quarter consumer price index data.

"They did talk about inflation remaining high in the short term, but on balance economic growth remains subdued," he said.

But the banks aren’t necessarily listening. Commonwealth Bank chief executive Ralph Norris last month refused to guarantee that CBA would cut interest rates if official rates were cut.

Full story at news.com.au

The Australian Dollar has lost a lot of ground against the pound at the moment falling from 2.0500 to 2.1200

if you need pounds to australian dollars at the best exchange rate or a Australian Mortgage

contact IMS Foreign Exchange

Australian Interest Rates unchanged

The Reserve Bank of Australia as expected left Interest Rates unchanged at 7.25 percent last night breathing a sigh of relief from those with an Australian Mortgages. Australian Housing prices have taken a tumble over the last few months and with the commodity boom seaming to be coming to an end many hoped the RBA would actually cut interest rates and provide a soft landing and slow the economy rather than let it head to a recession.

A summary of the main points are as follows from its policy statement;

There has been substantial tightening in financial conditions.

Scope to move towards less restrictive policy.

Considerable uncertainty surrounds outlook.

Looking more likely that demand will remain subdued.

Inflation likely to decline over time.

Tightening in conditions, rising fuel costs, lower asset value restrain demand.

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Pounds to Australian Dollars currently 2.1294

Pounds to Euros currently 1.2625

Pounds to US Dollars currently 1.9583

Canadian Dollar was overvalued at $1.00

Foreign Exchange Traders are scrambling for reasons why the Canadian Dollars and Australian Dollars exchange rates are so weak. One idea is that carry-traders are feeling risk averse and reducing activity. Another idea, and one we like better, is that commodity prices are falling, whether we want to see it as bursting bubbles or not. Behind the drop in commodity prices is slowing demand from the US (affecting the CAD) and from China (affecting the AUD). Bloomberg notes that 54% of Canadian exports are commodities such as gold and oil, and the rest of the economy is dependent on the US, too. Canada’s growth will be only 1-1.5% this year, less than the US.

The Canadian Dollar was overvalued at $1.00 and still overvalued at 98 cents.

Australian biggest six-month fall in wealth since the 1982-83 recession.

Alarm over fall in wealth

TUMBLING share markets and sliding property prices have produced the biggest six-month fall in wealth since the 1982-83 recession. The fall in wealth comes as income growth has stagnated and is expected to cause consumer spending to remain weak into next year. However, Finance Minister Lindsay Tanner called on people tipping a recession to take a reality check, saying the economy was still in good shape, even though it was slowing. "It's crucial that we don't get spooked by one or two bad sets of figures," he said, ahead of the Reserve Bank board meeting tomorrow. He said the budget tax cuts andthe continuing resources boom would keep the economy "ticking along".

"Yes, the economy is slowing, yes, we need to take the steam out of inflation, but people talking recession are getting way ahead of the facts."

However, economists say there is a growing number of indicators showing the economy is in danger of contracting. Investment bank ABN-Amro estimates that average wealth fell by 5 per cent in the first half of this year. The bank's chief economist, Kieran Davies, said declines in wealth were unusual, with the decline in the early 1980s the only time since World War II when wealth dropped more rapidly than in the past six months:

"The rapid decline in wealth is another series that can be added to the already long list of indicators that are behaving as if the economy is on the edge of, or in, recession."

The value of household financial assets fell by 6.6 per cent in the March quarter as share prices plummeted and by a further 1.25 to 1.5 per cent in the June quarter.
Housing accounts for about two-thirds of household wealth and is also slipping in value. Preliminary estimates suggest that housing prices fell by about 2 per cent in the second quarter.
Mr Davies said the fall in wealth this year contrasts with the 11 per cent growth in the value of household assets last year.

Households traditionally spend a portion of increases in wealth, and cut back when it falls.
Mr Davies said there was a possibility spending could decline by 1 per cent. He said rising interest rates and inflation had also brought growth in disposable income to a halt, after rising at a rate of 8 per cent last year.

He said this year's tax cuts should lift income by about 1 per cent, but the underlying trend showed no growth.

Although financial markets expect the Reserve Bank to deliver its first cut to interest rates in September, most economists believe it will take longer for the bank to act.

A survey of private sector economists conducted by Reuters found that only 8 out of the 21 it asked expected rate cuts this year, with only a 30 per cent chance given to a cut by September.
All but one of the economists expect the Reserve Bank will have cut interest rates by this time next year.

The Reserve Bank may want to see some evidence that the slowdown is affecting the labour market before concluding that the threat to inflation from an over-stretched economy has eased.
Employment figures for July will be released on Thursday, with economists tipping a small increase in the unemployment rate to 4.3 per cent.

Full story at The Australian

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Pounds to Australian Dollars currently 2.1100

Australian Dollar fell

The FT reports that the Australian Dollar fell on reports in the Australian press that the Reserve Bank of Australia would seriously consider cutting interest rates after its policy meeting next week.

The Australian Dollar was also hit by a fall in the Chinese purchasing managers’ index, which dropped below the 50 level that suggests contraction for the first time on record. Analysts said this was evidence that rampant Chinese demand for Australian commodities might have peaked.

The Pound to Australian Dollars today took a battering and the best australian dollar exchange rate is currently 2.1176