The Australian dollar seen its biggest one day fall in over 12 months on Friday after the US Federal Reserve commented that a 50 basis point increase is "on the table" at their next interest rate meeting in May.
The AUD/USD exchange rate dropped 1.74% after this news as funds flowed back into the USD and seen that rate drop from 0.7370 at the open of the day, to close at 0.7249, the lowest we have seen in over a month.
Since the AUD/USD reached 0.7540 and tested previous highs back in early April, the rates have continued to retreat back slowly, however Fridays move was heavy and unexpected, and this is why we have seen such a large drop.
Talks of Australia also raising interest rates locally has been strong, however several economists have commented that this may be pushed out to June given the current high house pricing, transport costs and even food prices seeing large increases and an overall pick up in inflation the RBA may hold off on a rise in May to avoid putting too much pressure on the general household right now.
The AUD has seen a similar pattern against the EUR and GBP, after reaching multi year highs in early April, it has seen a steady decline and a large sell in recent days.
In the UK, the last week has seen an output of poor economic results, with consumer sentiment the lowest it has been reported since 2008, and with local retail sales figures coming in much lower than expected the GBP has been taking a hit, falling to an 18-month low against the USD and reaching 1.28 for the first time since October 2020.
The EUR also continues to weaken against the USD, and it now approaching its lowest point since March 2020 and within touching distance of $1.07, a rate unthinkable a few months ago after sitting around $1.15-1.16. With French elections on-going over the weekend the outcome of this will also impact the EUR in the coming days.
As we have mentioned several times recently, the current market conditions are very unpredictable, and this leads to large prices moves and swings, sometimes these can work in your favour, and sometimes they can really impact your business, we are always available to a chat and look at any potential options to remove this volatility from your business and help forward plan and manage risk.
Feel free to reach out and we look forward to speaking to you.