Australian Dollar boosted by RBA news
18 October 2016 by News DeskAustralian Dollar and Pound pair slumped on Tuesday as higher demand for risk-correlated currencies buoyed the Australian Dollar.
Australian Dollar was boosted by Australian news as the Reserve Bank of Australia (RBA) published its latest meeting minutes and RBA Governor Philip Lowe held a speech in Sydney according to currency specialists TorFX
Lowe’s speech stated that the bank was preparing for potential events in the global market that could cause the Australian Dollar volatility or uncertainty – such as a win from Republican candidate Donald Trump.
Meanwhile, the bank’s minutes indicated that upcoming data, such as inflation and employment reports, will be vital on deciding interest rate policy in its November meeting.
While the report was generally hawkish, these comments held the Australian Dollar back from its best levels as they indicated that the bank could consider more easing if key data disappoints.
New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate continued to extend its record-lows throughout Monday’s session, as higher demand for risk-correlated currencies amid lower Fed rate hike bets bolstered the ‘Kiwi’.
Investors also rushed into the New Zealand Dollar in anticipation of New Zealand’s Tuesday stats, which included key inflation results for Q3. These scores surprised investors by coming in above expectations, showing that inflation had beaten the Q3 forecast of 0.0% to score 0.2%, while yearly inflation slowed from 0.4% to 0.2% rather than the expected 0.1%.
This left the New Zealand Dollar sturdy on Tuesday, and the currency was able to hold near its record highs against the Pound.
Australian Dollar boosted by RBA news
Pound Sterling (GBP) – Sterling saw another day of mixed sentiment on Monday, slumping in the European session on worries of Brexit-related infighting in the UK’s Conservative government, before advancing overnight.
The Pound was able to advance as markets anticipated Tuesday’s UK Consumer Price Index (CPI) stats. Despite this, analysts have suggested that a Sterling rally on strong inflation is unlikely, as the Bank of England (BoE) reminded markets last week than it would overlook inflation caused merely by Sterling’s drop in value.
When Britain’s inflation stats were published, they came in higher-than-expected, spiking to 1.0% year-on-year. However, as was suggested, Sterling saw little movement following its release as markets knew this score would not affect BoE policy.
US Dollar (USD) – The Pound to US Dollar exchange rate trended poorly for most of Monday’s session, but Sterling clambered back some value and attempted a solid recovery later in the session as the US Dollar was sold in response to yet more dovish comments from Federal Reserve officials.
Fed Vice Chairman Stanley Fischer stated in the American session that multiple factors have weighed on US interest rates and could continue to do so. He indicated that there was good reason to hike rates, but his echoing of Chairwoman Yellen’s Friday comments that eased policy could maintain stronger economic development weighed heavily on markets expecting a December rate hike.
If Tuesday’s US Consumer Price Index (CPI) scores beat expectations of 1.5%, December Fed rate hike bets could improve regardless of dovish Fed comments. This could help the Dollar recover from its Monday drops.
Euro (EUR) – The Pound to Euro exchange rate slumped earlier in Monday’s session before attempting a recovery in the evening, as weakness in the US Dollar caused traders to jump to the cheap Pound.
The Euro was unable to hold its ground in the American session as the Pound advanced, despite Monday’s Eurozone inflation data meeting expectations of a solid advance. Consumer prices rose from 0.1% to 0.4% month-on-month in September as preliminary figures suggested, with the yearly score improving from 0.2% to 0.4%.
This increased hopes that the European Central Bank (ECB) would return to more normalised monetary policy soon, but new analyst projections that the bank is unlikely to taper its quantitative easing until Q3 2017 weighed heavily on Euro demand. Investors had previously speculated that the ECB would hint at returning to normalisation sooner, which had strengthened the Euro on Monday. Analysts now instead believe that QE will be extended beyond its original March endpoint.
Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate trended flatly throughout Monday’s session, briefly dipping to new three-year-lows on lingering demand for risk-correlated currencies as well as drops in Pound sentiment.
However, the Canadian Dollar ultimately remained weaker than its risky peers as prices of oil, Canada’s primary commodity export, began to slip after over a week of rallying. While oil prices regularly hopped back up again amid their drops, speculation among market analysts sees prices of the commodity falling further due to a lack of real reason to keep prices high.
Some claim OPEC’s proposed oil output cap will not have a considerable effect on prices, which has put a dampener on ‘Loonie’ trade thus far this week.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.
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