With fresh reports coming out surrounding the recent climb in value of the Australian Dollar, and with figures estimated to be the highest level in nearly a month, it looks increasingly tempting to jump into trading in Australia right now.
But, given the state of affairs the economy is in, and, following figures released over the last year, is it wise to believe that this recovery is likely to keep on moving ahead?
For traders tempted to jump back into following the Australian economy’s movements, it might be wise to look into Forex trading with Vantage FX and tread carefully when it comes to future action.
The following four reasons, furthermore, hope to persuade you against the recent spike and potentially prise you into taking a more considered, conservative approach when it comes to the considering where the market is moving.
Local Share Market
Despite new figures showing the AUD’s recent climb to 82.5 US cents there remains one important caveat to consider; the fact that share market fell at the start of the week. Premeditated perhaps by the reported losses on Wall Street and Europe after the turn of the New Year, key players in the AUD continue to spiral down including the likes of Rio Tinto, Woodside, Santos, Newscrest and National Australia Bank. Watchful traders should keep on eye on market movements considering the rates surrounding Australia’s major economic drivers and analyse carefully just where they expect the AUD to go.
While ANZ’s monthly analysis highlights that the number of advertised job vacancies in the country was up 1.8% in December, the news, concerning unemployment in general, isn’t exactly assuring. With the jobless rate still continuing to stand at its highest level in a dozen years, the 6.3% figure still appears problematic in testifying toward long-term improvement for the AUD. Projections are that it will rise further, owing to the situation in Australia’s two most impacted states, Queensland and Victoria.
Morgan Stanley’s recent report on the Australian economy projected something of a dark cloud over the market, with the economy estimated to move at its slowest speed since 2009. This soft growth, coupled with just as uninspiring projections for consumer spending, might pull even more people away from the prospect of trading. With the unemployment rate and slow wage growth feeding into decreased consumer spending, the outlook doesn’t look good.
Fall of AUD
Possibly the biggest reason to take care with the Australian market is the news surrounding the AUD, which, as the other pessimistic projections suggest, is likely to fall too, with figures shifting around US76.00 cents. Since dropping from US93.00 cents in September to US82.00 cents at the close of last week, the accuracy of these projections looks fairly credible.