As the US dollar rally starts to gather momentum, the euro is approaching its lowest levels in almost a year.
Divergence between the FOMC and ECB interest rate outlooks has been the main driver behind the move that has seen the euro fall 6 per cent since early May. The wedge between the two is only getting wider, with comments from both US Federal Reserve Bank chair Janet Yellen and European Central Bank president Mario Draghi dragging the euro lower over the weekend.
Change of tone in the US
Most of the focus from the Jackson Hole symposium over the weekend has been on remarks made by Janet Yellen. Her comments on the North American economy appear more neutral than hawkish as some have suggested.
They are, however, less dovish as the market has come to expect, and it was a reference to interest rate hikes potentially coming “sooner than market participants currently expect” that sparked a flurry of demand for the greenback. Although the timing on US interest rates is unclear, Yellen’s tone is to be expected, especially from a central bank edging very slowly towards monetary policy tightening.
Economic data takes centre stage
Looking beyond the headlines, it is clear there are still some considerable risks ahead for the US economy. The Fed is looking at much more than just the unemployment rate for a reading on the employment market. Continue reading →
AUD/EUR Fundamental Outlook
AUD/EUR continued gaining ground in July, gaining another +0.9% overall for the month. The gain in the cross was in part due to asset flows and risk appetite favouring the Aussie over the Euro, the interest rate differential and as both economies reported mixed economic numbers. Economic data out of Australia was on balance better than Eurozone numbers, although weakness was evident in Retail Sales, Building Approvals and the Trade Balance.
Traders will be looking to the ECB rate decision on the 7th, as well as the RBA’s Monetary Policy Meeting Minutes for a better perspective on the direction of the cross. Due to weakness in the Eurozone, the rate differential and improving numbers in Australia, the outlook for the cross is positive in the near and medium terms but neutral longer term.
AUD/EUR Technical Chart Outlook
After making a 0.6314 low in late January, AUD/EUR has since been rallying correctively. The cross made yet another recent high at the 0.7035 level on July 23rd after breaking up out of a mildly declining consolidation range on the 21st.
The outlook for AUD/EUR over the coming month is mildly bullish short term and more bullish in the medium term while the channel top line break is sustained to set up a 0.7780 breakout target. Continue reading →
AUD/USD Fundamental Outlook
AUD/USD reversed direction in July, dropping -1.4% for the month overall. The decline in the rate was in part due to speculation of tightening by the Federal Reserve, continued dovish RBA monetary policy and mixed economic data from both countries. Australian economic numbers were mostly better than expected or on target in July, with the notable exceptions of Building Approvals, Retail Sales and the Trade Balance, all printing lower than the analyst consensus. In addition, the Australian Unemployment Rate rose a notch to 6% from 5.9%.
Traders will be looking to the RBA’s Monetary Policy Meeting Minutes on the 19th and the FOMC Meeting Minutes on the 20th for a better indication on interest rates and the direction of the exchange rate. Due to continued risk appetite favouring the Greenback, the outlook for the rate is neutral in the near term, lower in the medium term and higher in the long term.
AUD/USD Technical Chart Outlook
After AUD/USD peaked at the 0.9461 level in early April, the rate has since been range trading between that high point and the 0.9202 low of May 1st. Early July saw the rate decline within this range to 0.9378 before then rallying to 0.9474 by the 23rd. The rate subsequently sold off to call as far as the 0.9275 level by July 31st.
Overall, AUD/USD’s medium term outlook gives a neutral to mildly bearish appearance while trading between its 61.8% and 50% Fibonacci retracement levels at 0.9271 and 0.9573 respectively. Continue reading →
GBP/AUD Fundamental Outlook
GBP/AUD gained fractionally in July, increasing 23 pips or +0.1% overall for the month. The marginal increase in the cross was in part due to asset flows favouring Sterling over the Aussie and with mixed economic numbers out of both countries.
Traders will be watching the BOE rate decision on the 7th, as well as the RBA’s Monetary Policy Meeting Minutes on the 19th for a better idea on the direction of interest rates. Due to the interest rate differential and improving numbers in both countries, the outlook for the cross is neutral near term but otherwise positive.
GBP/AUD Technical Chart Outlook
GBP/AUD rallied to peak at 1.9186 in January, but then came off as far as the 1.7736 level in early April. The cross has since been consolidating within a gently rising range, making highs at the 1.8373 and 1.8364 levels in July.
Overall, the outlook for GBP/AUD looks rather neutral over the coming month until it breaks out of its current gently rising channel to signal an additional move in the direction of the breakout equal to the channel’s width. A downside break is currently preferred.
After a stint on the sidelines, Reserve Bank of Australia Governor Stevens took the opportunity to resume attempts to talk the Aussie dollar down last week. It was a timely return given the recent surge, but is it enough to send it lower?
It was the first time the RBA governor had been so explicit about the value of the Aussie dollar since he talked of 85 US cents as ‘fair value’ at the end of last year, with some analysts saying the currency could be as much as 12 per cent overvalued. Of course, currencies rarely trade at ‘value’, with this very term being quite subjective and of little significance, anyway.
Australian rates on hold – so what’s new?
What I found most interesting about Stevens’ comments were not necessarily those blatant references to the currency, which the RBA can’t really control anyway, but his views on the economy and interest rates, which of course have a real bearing on the direction the currency trades.
He downplayed any negative impact from the budget, mentioned positive early signs of growth in non-mining activity, said monetary policy is already “very accommodative” with real cash rates “well below normal levels” and that low interest rates are working. These are hardly words of a governor that is actually considering reducing interest rates nearer to zero like Europe, the UK or the US.
All in all, I don’t think we got as much out of Stevens as the market has made out. He confirmed interest rates will remain on hold for an extended period. We knew this anyway.
Stevens needs Yellen
For the RBA to get its way and have the Aussie dollar trade back towards 85 cents, it really needs the greenback to rally. On that front the RBA has bought itself some time.
Stevens needs Yellen to do the heavy lifting — or should I say AUD selling — by providing some timeframe for an adjustment in US interest rates higher post QE tapering. Not likely any time soon. Continue reading →
The RBA has made a lot of noise about the economic benefits of a lower Australian dollar recently and most businesses involved in the local tourism sector, and exporters in general, agree a lower currency would help them remain competitive.
Some manufacturers might beg to differ however. In theory a lower Aussie dollar can help make locally-manufactured goods more competitively priced compared to imported goods. In reality, things aren’t so simple.
A 10 per cent drop in the Aussie dollar will, eventually, make imported goods more expensive. Crucially though, this will not necessarily translate to a 10 per cent increase in business for the manufacturer. What it can do is actually increase costs by 10 per cent without a noticeable rise on the other side of the ledger.
Some OzForex clients are expressing a preference for a higher Aussie dollar given they import many raw materials that go into the manufacturing process. Continue reading →
Excited to announce that the BestExchangeRates team and friends (pictured below) will be converging from Australia and the UK to Japan for a field study trip to research all matters Yen AUD/JPYGBP/JPYand oh a few powder runs and Onsen along the way
Along the way we will compare using Cash, Bank Credit Cards and Prepaid Multi-currency Travel Cards from Travelex OzForex and QantasCash. Also to be investigated is whether Japan really is a cash only/preferred economy, and the strange and wonderfully inexplicable workings of Japanese ATMs and Toilet Flush mechanisms. Continue reading →
We first heard rumblings of discontent from leaders of emerging market economies around the middle of last year when it looked as though the US was about to commence tapering quantitative easing. These rumblings are likely to get a whole lot louder this time around though, as the impact of US policy starts to bite these economies hard.
The possibility of a Global Emerging Currency (GEC) crisis has grown over the last week with emerging market currencies around the globe such as the Argentine Peso (-5%), South African Rand (-3.6%) and the Indian Rupee (-2.2%) sold heavily in the last week alone. If it continues, as I think it may, then undoubtedly the Australian economy and the Aussie dollar will also be affected.
What’s different this time around?
What strikes me about the recent price action is that unlike previous emerging currency crises, think Latin America in the ‘80s or Asian Currencies during the late ‘90s, the selling does not appear to be geographically specific. This is not just an issue for South America or some parts of Asia, as we have also seen currencies in Europe like the Russian Rouble (-2.6%) and Turkish Lira (-4%) weaken.
This time around the catalyst is coming from one global external source and as such it has the ability to reach all four corners of the globe.
It’s not all down to US QE tapering though. There are some country specific economic factors (e.g. widening deficits or political uncertainty) contributing to the performance of each economy but the markets seem to be driven more by fear at the moment. Continue reading →
We came across an article in The Australian Financial Review today on OzForex with an interesting experiment of splitting a $200K AUD->USD transfer into two, with half sent via OzForex and the other half by one of the ‘big four’ Australian banks on the same day to compare what arrives at the other end.
The results are illuminating….!
If you have ever converted currencies or transferred money overseas, you may have been shocked to discover how much you were charged by your friendly bank to move your money.
Recently, a friend was preparing to transfer $200K overseas. I asked him if he would split the transaction into two lots, in order to try OzForex.
After signing up to their online platform, he transferred $100K through one of Australia’s big four banks and the other $100K through OzForex. Continue reading →
All Vendor currency exchange rates on BestExchangeRates are compared to what we call the Mid-Market Rate for each currency pair.
This mid-market rate (sometimes also called the interbank rate or spot rate) is used in global financial markets and what you normally see reported on the news.
It is called the “mid-rate” because it is always half-way between latest BUY and SELL rates for the currency pair.
Generally they say when investing you should buy low and sell high and that is exactly what the banks are doing with you, they buy currency from you at low rates and sell currency back to you at high rates, so unfortunately you end up buying high and selling low!
That is why most banks and brokers hide this mid-rate from you by marking it up significantly – to their own benefit. Continue reading →
There are lots of ways; most importantly you need some information. When you use BestExchangeRates you can see clearly which currency vendor is offering the best deal for your needs, most importantly who is taking the smallest margin and fees to give you the largest possible converted amount. Continue reading →
Peer-to-Peer is a recent innovation for international money transfers. The playing field is being levelled with retail customers benefiting from great rates that were previously only available to big companies. At the forefront of this innovation are ‘peer to peer’ money transfers.
Online peer to peer (P2P) first began in the early nineties, with file-sharing services like Napster, Bearshare and KaZaA. Since then, P2P developed into numerous other, more legal, uses. Skype, for example, uses a hybrid of P2P and client-server systems. P2P lending is increasingly common with sites like Lending Club and Prosper.com connecting individuals seeking funds with others able to lend money in return for interest. Even sites like Ebay and home rental service AirBnB come under the umbrella of P2P ‘collaborative consumption’.
Now peer to peer has come to the financial services industry too. Sites such as CurrencyFair.com put the power in the public’s hands, allowing you to get a great exchange rate with a safe and secure money marketplace.
P2P currency exchange and money transfer providers such as CurrencyFair bring together a network of users, each looking to exchange money for another currency. By matching you with another user selling the currency you want to buy, the P2P provider is able to offer an exceptional rate, and unlike banks and brokers, the rates are NOT dependant on how much you exchange. Every customer gets equal access to the same fair rates. Gone are the large middleman fees charged by banks and brokers.
The P2P provider, as a regulated entity, also provides security and convenience. They ensure that you can exchange safely, and that your money gets where it needs to go efficiently and quickly.
Is peer-to-peer the future of international money transfers? Only time will tell.
Many people who have traveled abroad have felt the temptation to purchase property overseas. For example, UK residents often consider buying overseas property in nearby European countries like France or Spain, Australian expats are buying property in Asia and Americans in Europe and Mexico.
Sometimes the price of foreign real estate can seem very attractive due to the foreign exchange rate favouring the prospective buyers’ currency. Tourists can also become enamoured with a delightful travel destination, perhaps leading to an interest in buying overseas property as a way to spend more time there. Still others might be interested in investing in undervalued overseas property based on the view that it will appreciate substantially over time.
Whatever your motivation for buying overseas property, the following top five tips can help assure that you have a more positive experience in doing so.
Tip #1: Investigate the Market Thoroughly
Although global property price trends do occur, real estate markets in different locales can go through cycles of rising and then correcting lower, which can be independent of each other.
In other words, just because property values are rising in your neighborhood does not mean that they are also rising abroad. Such trends are especially important for investors who will typically want to buy near the bottom and sell near the top of a cycle.
Furthermore, some countries prevent or limit real estate ownership by foreigners, so you will want to make sure that you have the legal right to purchase real estate in that country and under what conditions you can do so before handing over any money in order to avoid scams or disappointment.
Basically, it really makes sense to do your homework about the real estate market in the country you are considering making a purchase in before putting up your money.
Tip #2: Obtain Professional Purchase Assistance
Great deals can certainly be had when buying foreign real estate directly from owners. Nevertheless, if you are unfamiliar with the foreign real estate market, then purchasing through a professional real estate agent or from a reputable property developer can provide useful guidance that can help you avoid many pitfalls when buying overseas property.
Such professionals typically have an obligation to see that you are properly informed about the details of the purchase. They will also usually make an effort to complete the deal and assure your satisfaction with it.
Tip #3: Hire a Legal Representative
Although real estate deals in your country of residence generally do not require the services of a lawyer, having an independent professional attorney representing your interests and watching out for potential legal problems can be invaluable when buying overseas property.
Tip #4: Have Key Documents Translated
Before signing any documents relating to a potential real estate transaction, make sure that you have them professionally translated if they are written in a foreign language that you are not entirely comfortable reading. In general, you need to know exactly what you and the seller are agreeing to in words that you can clearly understand.
Tip #5: Saving Money on Mortgage Payments
Once you have read, understood and agreed to the terms of an overseas property purchase, you will then need to make arrangements to pay for it.
When transferring funds denominated in your domestic currency to either make a payment in full, a down payment, or a series of smaller mortgage payments, you will probably want to find a better foreign exchange solution than simply visiting your high street bank.
To speak to one of the accredited OzForex dealers about your foreign exchange requirements call 0845 686 1950 in the UK; 1300 300 424 in Australia; 1800 680 0750 in Canada or 0800 161 868 in NZ) or go to https://www.ozforex.com.au to register on line with 3 easy steps.
Registering with OzForex is FREE and you can view their live dealing rates immediately. Remember to mention you are a client of BestExchangeRates you will receive your first two transactions fee FREE!
The Australian dollar has hit new record highs in recent months rising to a 28 year high against the pound sterling (GBP) and also against the Japanese yen (JPY). Despite speculation that the recent RBA interest rate drops would substantially impact its valuation, the strong Aussie dollar looks like it’s here to stay awhile. Australians can take advantage of favourable currency exchange rates by looking overseas for some great buys.
Have you always dreamed of wandering through the beautiful cities of Europe or catching a glimpse of the bright lights and movie stars in the US? Perhaps combining skiing, culture and sushi in the normally expensive Japan is also within reach. Now is the perfect time to head overseas and do some international travelling. With airlines competing hard to offer the best fares, Australians will find their dollar going much further at popular destinations like the States. There’s no better time than now to plan your trip as experts recommend travelling sooner rather than later.
Meanwhile, if you have a trip planned in the next 6 months or so, it could be worth stocking up and purchasing a portion of the foreign currency now on a Prepaid Foreign Currency Travel Card rather than waiting until you arrive.
Buying online from overseas
The internet has made it easy to make purchases from overseas in foreign currency. While Australia lags behind other countries when it comes to online buying, experts are predicting that the recent strength of the Aussie dollar will have online expenditure figures soaring in 2013.
Books, CDs, electronics, gifts and clothing are just some of the goods that Australians are snapping up from international stores and having shipped to their door. Technology items such as computers, laptops and cameras are popular buys for their higher price points and the fact that they don’t incur an import tax, unlike cars. Remember, that if you are shopping from overseas to check for any additional charges for international buyers and that the seller does indeed ship to Australia.
Smart investment and business
Investors should take a good look at where their investment dollars are tied up and the impact the currency rates could have on business returns. As is the case with most money matters, a strong dollar can have both positive and negative effects depending on the vertical and the nature of a business’s operations. Overall, it’s a good time to consider foreign investments while some Australian companies may be able to take advantage of the strong dollar by sourcing cheaper resources and suppliers from overseas. However, other local businesses, especially exporters, may suffer as a result of higher price points that make them less competitive in the international marketplace.
When it comes to getting more bang for your buck, it’s about knowing where to spend your money to extract the most value. Money experts are expecting the Australian dollar to remain strong for the coming months so it’ll be smart to take advantage of these great exchange rates soon.
No matter what your transfer reasons are the strong Australian Dollar means you end up with more in your pocket.
To speak to one of our accredited OzForex dealers about your foreign exchange requirements call 1300 300 424 in Australia (0845 686 1950 in the UK; 1800 680 0750 in Canada or 0800 161 868 in NZ) or register online.
Registering with OzForex is FREE and you can view their live dealing rates immediately. Remember to mention you are a client of bextexchangerates.com.au you will receive your first two transactions fee FREE.
There are a number of cost components to making and receiving international payments, most of which are far from transparent to customers:
Currency conversion rates : Banks charge huge margins for currency conversion to the majority of businesses and individuals. They tend to fix rates once a day and therefore need to incorporate enough margin to protect against intraday rate volatility.
In addition, the level of price discrimination is extortionate – they get away with it because they can; businesses and consumers have been kept apathetic to using better alternatives.
Correspondent bank fees : These relate to the network of banking relationships that are utilised to complete an international transfer. Each correspondent bank skims a fee of the transferred amount for simply acting as link in the payment chain.
Customers are rarely made aware in advance as to how many correspondent banks are in the chain and what they will charge. Continue reading →
The high Australian dollar means there’s rarely been a better time to travel.
Not only are airfares, accommodation and transport more affordable, but your increased shopping power will net you all types of bargains.
But while it’s true that the Australian dollar is up for most destinations, there are a few that really stand out.
In order, here are the best places to holiday if you want your dollar to work the hardest:
Three years ago in April 2009, $1 Australian would buy you 0.55 Euro.
Today, it’ll buy you 0.79 Euro – an increase of more than 43%
From Paris to Berlin, that’s a massive jump in your spending power. Travellers can thank a lack of confidence in the Euro as a result of problems in Greece, Spain, Portugal and other European countries for the bump. Continue reading →
By registering for a Vendor Account you can submit your rate margins and fee structure by currency pair & deal amount as Pricing Rules using the following interface :
The margins are then applied to the latest market mid-rate and displayed in order of closest to the mid-rate along those of other vendors.
You provide your a Link for referral customers to click on and be brought to the desired destination on your website.
Website FX rate automatic import
If your rates are already publicly available on your website we can arrange for your rates to be incorporated into our fx rate comparison algorithm. This is an automated process if your rates are available on the web in a suitable format (a publicly accessible html <table> without login).
BestExchangeRates can provide a source of well qualified traffic for your Forex related site. Our customers tend to be people looking to transfer money and have an immediate need to find a vendor that can provide them with good rates and a reliable service.
Note there are various monthly fees for the above Vendor services – please Contact Us for any information on any of the above.
Wondering what those extra “Fees” are on your credit card statement for purchases in Foreign currencies? Most banks and financial institutions charge these sneaky fees for transactions in a foreign currency (as much as 3% of the amount), only a few do not charge a fee for this so its worth knowing what your card is costing you. Continue reading →
It is time for Spain and the victim states to seize the initiative. They cannot force Germany, Holland, Finland and Austria to swallow eurobonds, debt-pooling and fiscal union, nor should they try since that implies the evisceration of their own democracies.
Interesting article from FT.com on why Retail FX spread trading is a racket…its all in the volatility and ability to bear it.
FT.com (Jul 13 2012)
Long established as the global hub for wholesale currency trading, Britain is now also the centre of the retail FX margin trading business. And there’s a reason for this: in many key aspects, FX trading is largely unregulated.
In the US back in 2010 the Commodity Futures Trading Commission imposed a 50-1 leverage cap after seeing retail customers being offered deals of up to 200 times their initial margin downpayment, yet in the UK today it is common to see broker customers being offered up to 500-1.
You might ask, what’s wrong with that? Speculators should be free to speculate. Except that this is a racket where the higher the leverage ratio, the greater the certainty the client will lose and the firm will profit. Whether it happens instantly or less quickly, the business is structured so that the customer almost always comes out worst.
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