Australian Dollar boosted by US dollar

28 November 2016 by News Desk   |   SHARE  

Australian Dollar traders sold the pair of currencies from their weekly highs after Thursday’s strong trade.

Australian Dollar was able to advance thanks to weakness in the US Dollar amid the Thanksgiving holiday as well as a surge in iron ore prices, according to currency specialists TorFX

Australian Dollar was also boosted towards the end of the week by an unexpected improvement in Japanese inflation.

Japan’s October Consumer Price Index (CPI) rose from -0.5% to 0.1% which increased hopes of economic strength in Asian markets.

New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate slipped from its weekly highs on Friday as strength in the Australian Dollar and weakness in the US Dollar gave the risk-correlated ‘Kiwi’ room to breathe.

Traders also indulged in a bout of profit-taking following GBP/NZD recent multi-week best, selling Sterling from its highs and buying the New Zealand Dollar from its lows.

Australian Dollar boosted by US dollar

Pound Sterling (GBP) – The Pound saw mixed movement last week, advancing on hopes of the British economy weathering the Brexit process and optimism that the UK government could negotiate a Brexit transition period.

While it was sold slightly from its best levels on Friday, it was able to hold its ground due to these ongoing factors as well as news that Britain’s economy had grown 0.5% in Q3. This was the strongest proof thus far that the Brexit vote itself had not had an immediate negative effect on Britain’s economy – but fears of higher inflation affecting the average consumer in the next year remained a concern.

US Dollar (USD) – The Pound to US Dollar exchange rate was able to advance towards the end of last week’s trade session thanks to light US trade during Thursday’s Thanksgiving holiday and Friday’s underwhelming US goods trade balance. October’s advance goods trade balance was expected to worsen from $-56.5b to $58b, but instead worsened to a significant -$62b.

While the ‘Greenback’ continued to see mixed demand on Monday due to anxiety about the upcoming Trump Presidency, upside factors in the US Dollar remain strong due to bets being over 90% that the Federal Reserve will hike US interest rates in December.

Euro (EUR) – The Pound to Euro exchange rate gained around a cent in value last week. While GBP/EUR briefly slipped on Friday as a weaker US Dollar allowed the Euro to advance, the British currency was able to hold its ground and was able to easily sustain most of its weekly gains.

As well as a weakened US Dollar, the Euro also benefitted slightly from rumours that the European Central Bank (ECB) could delay extending its monetary stimulus measures into January due to the market volatility caused by the Trump win and the expectation of a December Fed rate hike.

If Draghi indicates during a speech on Monday that an extension of monetary stimulus could indeed be delayed until January, the Euro could strengthen. However if he continues to play up the likelihood of December stimulus the Euro is likely to remain weak against Sterling.

Canadian Dollar (CAD) – Concerns about whether or not OPEC will impress traders in this week’s meeting between oil producing nations weakened the Canadian Dollar late last week, which allowed the Pound to gain around a cent versus the ‘Loonie’ on Friday.

As a result, the GBP/CAD exchange rate traded near its best levels in two weeks over the weekend, but slipped on Monday morning as traders began to grow optimistic about the Wednesday OPEC meeting once again.

Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.

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