Is it Time to Get Positive About the Australian Dollar?

. 1 min read

After 18 months of gradual decline, the Australian Dollar is trading just below the 0.6900 level vs the USD.

This is close to the low point seen back in 2016 and the lowest point since the financial crisis.

The weakness in the Aussie Dollar can be put down to ongoing concerns about the trade war between the USA and China as well as weakness in house prices in Sydney and Melbourne.

However, we are starting to see some positives emerge.

Iron ore prices are at their highest level since 2014 when the Aussie was at 0.9500 vs the USD. In fact, Australia is running a massive trade surplus as booming commodity prices and the weaker Aussie Dollar boost export receipts and one could argue that Australia has been the main beneficiary of the trade war as China increases monetary stimulus to boost the domestic economy to offset the USA’s tariffs on Chinese exports.

Also, the recent Election has delivered a clear result which should boost business confidence. On top of this the main banking regulator APRA has slashed credit restrictions so Banks can boost their lending to the housing sector.

And finally, the Reserve Bank of Australia have said they will cut interest rates in June to help boost the economy.

Timing is always difficult in terms of the markets but a number of factors are now pointing in favour of the Aussie Dollar and the Australian economy.

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