A few months ago we wrote about how the Aussie dollar would fare over the next six months.
Well, it looks like we were right.
Markets & Money’s Jason Stevenson suggested that we would see a ‘strong bounce’ from the 71-cent level.
Based on what we have seen over the last two weeks, this bounce is beginning to happen.
From a low of 70 cents, the Aussie dollar has now moved north of 72 cents.
The Aussie dollar is surging
There are a few things at play here.
Firstly, it is important to remember that the Aussie dollar relies on strong commodities prices.
As covered yesterday, iron ore prices have rebounded.
Secondly, in recent decades the value of the Aussie dollar depends on how China fares.
This includes both their demand for iron ore and their currency.
Recently, Chinese Premier Li Keqiang announced that China would keep their currency ‘basically stable’.
This has resulted in stronger confidence in the Aussie dollar, but the jury is still out.
This finance expert is predicting a serious crash in the value of the Aussie dollar.
How long will the bounce last?
How long the bounce will last is difficult to say. The RBA has kept interest rates at record low levels.
Meanwhile, the US economy is perhaps beginning to overheat.
The Federal Reserve spins this as a sign that the US economy is doing very well.
On the other side of the coin, the trade war could eventually impact the market.
Either way, it is difficult to predict how the AUD will move in the mid to long term.
Economic growth has outpaced income growth for years now.
As talked about before, this could put the squeeze on the Aussie dollar.
Markets & Money will continue watching this story as it develops.
For Markets & Money
PS: This finance expert is predicting a serious crash in the value of the Aussie dollar. Download your free copy of Greg Canavan’s ‘Aussie Dollar Crash’ report today.