Bumpy ride for the Australian dollar

Kids and children boy and girl in a bumper car

Uncomfortably volatile at the best of times, the Australian dollar exchange rate got saw plenty of everything this week. It traded lower awaiting the US Federal Reserve’s monetary policy meeting, was on afterburners after some soft US data, and was only marginally bothered by the Greek crisis heading into the weekend.

Mixed messages from US Federal Reserve

The decision to leave rates alone this month was a foregone conclusion. The statement that accompanied the announcement inevitability created more theatre in the US interest rate drama. While still claiming to expect a rate increase (or two) in 2015, the central bank said increases would be gradual. But in the same breath, they cut economic growth forecasts for the year. Huh? I am confused!

Part of the reason for the severity of the move in the AUD to USD exchange rate was trader speculation. Traders were generally betting on a more clear and aggressive stance from the Fed. Disappointment ensued on the less encouraging and uncertain statement prompting a sell-off of US dollars.

Greece? Still?

Unwilling to sit on the sidelines, the Greek default story again gave foreign exchange markets plenty last week. With most leaning further and further towards a default and Eurozone exit, a couple of headlines was all it took to spark plenty of volatility. As negotiations stalled, a surprise story appeared that Greece’s European creditors may agree to an extension of emergency funding beyond the June 30 expiry of the bailout program. The rumour nudged the Aussie dollar exchange rate higher by over a cent. The fact was an extension of emergency funding to Greek banks explicitly while negotiations on the bailout program continue into the eleventh hour.

The rub

Fully expect further volatility in exchange rate markets as a result of both the Greek situation in Europe and the US interest rate discussion. It is hard to believe but China has become a passenger in the short-term. But watch iron prices, a large contributor to the Australian dollar exchange rate.



Recommended For You

Cheaper ways to transfer money overseas

5 Cheaper Ways to Transfer Money Overseas

Using a bank is one of the easiest ways of sending money overseas, but it is also the most costly. Here are 5 cheaper alternatives.


Currency Exchange

The Ultimate Guide to Currency Exchange

Want to know the best way to exchange money? This guide shows you how to track down the cheapest way to buy currency for an overseas holiday.


International Money Transfers

Transferring Money Overseas Without Getting Ripped Off

Transferring money overseas can be expensive and confusing. These guides show you different options and explain all the fees, charges and exchange rates.


Helping You Save Money on Currency

Buying travel money or transferring money overseas can be expensive and confusing. So how do you make the best choice and get the most out of your money?

An easy way is to use a comparison table for either international money transfers or currency exchange. These tables list and compare the banks with other large foreign exchange companies.

We’ve also put together tons of helpful videosguides and reviews that will help you make the right decision. You can work out a cheaper way of converting currency while still keeping your money safe.