Australian Dollar benefits from confidence31 October 2016 by News Desk
Australian Dollar solidity is seen to decrease the chances of the Reserve Bank of Australia returning to an easing bias in the near future.
The Australian Dollar has strengthened, defying the general trend of risk aversion, according to currency specialists TorFX
However, this bullishness could begin to wear thin as investors adopt positions ahead of tomorrow’s RBA policy decision.
New Zealand Dollar – Investors were not impressed to find that the ANZ Business Confidence Index had dipped from 27.9 to 24.5 in October, suggesting that sentiment within New Zealand’s economy remains rather bearish.
A sharp decrease in the M3 money supply was also cause for concern, pointing towards a potential softening in domestic inflationary pressure.
Altogether this did not encourage demand for the New Zealand Dollar, with the appeal of the higher-yielding currency also limited by a general mood of risk aversion.
Australian Dollar benefits from confidence
Pound Sterling – It was a rather volatile start to the week for the Pound, with markets reacting to conflicting reports over the future of Bank of England (BoE) Governor, Mark Carney. Investors were initially discouraged by the suggestion that Carney will depart the central bank in 2018, although this was soon countered by a report that he will instead seek to serve out a full eight-year term. While there has been no confirmation either way from the Governor himself, this air of speculation could see Sterling making further sharp moves ahead of the BoE policy meeting on Thursday.
Euro – In a major downside surprise, September’s German retail sales clocked in at just 0.4% on the year, as opposed to the 1.5% forecast. This prompted the Euro to slump across the board, offering a fresh sign that confidence within the Eurozone’s powerhouse economy has faltered. With the European Central Bank (ECB) still expected to announce an extension of its quantitative easing program in December, investors saw little reason not to sell out of the single currency at this juncture.
US Dollar – For the most part the ‘Greenback’ has managed to shrug off any market worries stemming from the latest developments in the presidential election. Demand has recovered from Friday’s rather mixed raft of US data, with the market opinion continuing to lean towards a December interest rate hike from the Federal Reserve. Despite some unease over political developments, the outlook of the US Dollar remains more bullish than not, with investors anxious to see the tone of discussions at the Fed’s November policy meeting.
Canadian Dollar – Demand for the ‘Loonie’ continued to weaken this morning, as oil prices remained under pressure. This weakness was largely thanks to news that a group of non-OPEC producers had failed to take any action on limiting output over the weekend, something that is not seen to bode well for upcoming OPEC talks. As the global oversupply glut continues to weigh on the minds of investors, the Canadian Dollar has struggled to gain any traction against rivals, particularly as risk appetite remains limited.
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