that's why this is called the prediction thread - we won't put you in the stocks in the village square and stone you on Saturday morning if you get it wrong
But if someone has a good understanding of how/why exchange rates react to interest rate changes then please chime in!
The reality is nobody 'knows'. Especially not the talking heads.
More money has been lost 'betting' on the direction of the AUD by fund managers, investment banks, foreign wealth funds etc than lost in the Australian share market, bond market & property market.
Historically the only people to make money consistently are the ticket clippers 'making the market' for the transaction.
A simple rule of thumb (with any large transaction) comes down to how much do you like to gamble, such as roulette? If you bet wrong - how much can you afford to lose?
If you're going to lose sleep over your bet (such as hoping to get a better rate by waiting & then spend minutes every hour checking to see what's happened) then perhaps re-evaluate what you're thinking.
Are you making the transaction for a specific reason? You entered into the transaction knowing how much it would cost you if you locked it in at the time, with a little luck the AUD has moved in your favour, perhaps not. The question is - do you want to try your luck as a gambler in addition to why you made the transaction?
Only you can answer that.
The most risk averse is to lock it in and face no risk of a worse rate (greater cost).
The riskiest is to wait & try and time it to achieve the lowest possible cost (& outwit those who do it for a living with access to superior information but not necessarily the ability to correctly interpret it).
Or something in between. Such as doing 1/3rd immediately, 1/3rd in a few days/week and living dangerously with the last 1/3rd being a naked gamble.
Others, with a
very good understanding of the FX options market might look into buying call options etc.
Greed can be fun but more often than not it can be an expensive learning experience about what not to do.
Example: Stock market crash in October 1987 - talking heads all jumped saying AUD would plummet. It had a minor fall but then regained it until several weeks later when one German fund manager (fixed interest fund manager) decided that Australia was too small a part of his fund to bother with it. He decided to dump his entire holding of around 1% of his fund immediately.
He made this decision just as London was closing and the handover to NY was happening. So low liquidity as market makers in Australian bonds and FX (in those days post crash) had their credit limits slashed and had cut back staffing.
The AUD dropped several cents in the space of 25 minutes, ten year bond rates went up nearly 2% (a loss of 11% in value since 5pm) with seller no buyer - I was rung up around 2.30am (as an Aust fund manager and offered $50m face value of the 'hot stock' 10 year bond - well I was asked to bid for it at any yield.
There was no way to predict that this would happen around 3 weeks after the crash. A couple of years later I met up with the German, who I'd worked out at the time was the cause (due to the particular bonds that suddenly were available on the screens & he explained what had led to his dumping his smallest country holding. Not one of the talking heads for the few weeks post this event was even remotely correct in what they said.
If something like this happened - could you afford it?
