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Australian Dollar boosted by US Dollar

24 November 2016 by News Desk

Australian Dollar was briefly bolstered by a limp US Dollar that strengthened when American markets opened.

Australian DollarAustralian Dollar was impacted by concerns over stricter US trading rules under the Trump administration, according to currency specialists TorFX

Traders were relieved by a less bearish than feared UK Autumn Budget Statement but US concerns continued to weigh on trade-correlated currencies like the Australian Dollar during Wednesday trading.

New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate surged on Wednesday.

The currency surpassed Monday’s highs and trending near its best levels since September thanks to market relief over UK Chancellor Hammond’s Autumn Statement.

The ‘Kiwi’ Dollar, on the other hand, was unable to hold back the Pound’s advances due to mixed demand for risk-correlated currencies.

Australian Dollar boosted by US Dollar

Pound Sterling (GBP) – Following Wednesday’s UK Autumn Statement from Chancellor Philip Hammond, the Pound rallied against most of its major rivals, reclaiming all of Tuesday’s losses and trending near the week’s best levels.

Hammond announced that Britain would be getting its biggest mid-year issuance in government debt since the financial crisis – which unfortunately means that the nation’s budget black hole will reach £122b over the next five years.

Figures also suggested that the Brexit process would make a huge direct impact of £58b on public finances. UK growth forecasts from the Office for Budget Responsibility were also slashed for the next few years.

The UK government’s previous plan under George Osborne to reach a surplus by 2020 was officially cancelled. Hammond also announced that £23b would be spent on developing innovation and infrastructure in the UK.

Markets were generally put at ease as the lack of bearish surprises was seen as a relief, allowing Sterling to recover from Autumn Statement jitters. Traders were also cheered by the increase in debt issuance. The news sent UK government bonds surging by nine basis points.

US Dollar (USD) – The Pound to US Dollar exchange rate advanced on Wednesday afternoon despite underlying strength in the US Dollar as UK investors were bullish on GBP after the day’s Autumn Statement.

Despite this, the US Dollar performed well in other currency pairings, in many cases surging largely thanks to a better-than-expected preliminary October durable goods orders report. Analysts expected a score of around 1.7%, but the result improved from -0.3% to an impressive 4.8%. Due to the US Dollar’s own strength, GBP/USD was unable to return to Monday’s highs and slipped slightly again on Thursday morning.

Euro (EUR) – The Pound to Euro exchange rate regained most of its Tuesday losses and kept rallying past Monday’s highs on Wednesday on trader relief following the UK’s Autumn Statement. GBP/EUR struggled to break past levels of key psychological resistance however.

Over in the Eurozone, the bloc’s preliminary November PMIs from Markit beat expectations in many prints. The overall Composite results improved from 53.3 to 54.1 despite being predicted to remain at 53.3 as private sector activity in France came in well above expectations. The bullishness of the US Dollar kept the Euro weaker through negative correlation.

The Euro was also weighed down by ongoing concerns about rising populism in the Euro area, as well as increasing bets that the European Central Bank (ECB) will be extending its stimulus measures in its December meeting.
Thursday saw the publication of Germany’s final Q3 growth stats, which met preliminary figures of 1.7% year-on-year.

Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate gained around a cent in value during yesterday’s trade session as UK traders were calmed by the Autumn Statement while the ‘Loonie’ was weaker due to slipping oil prices.

Prices of oil, Canada’s most lucrative commodity, have dipped from their highs in recent days as doubts emerge on the potential effectiveness of an OPEC output cap agreement. Jitters in oil trade are inevitable however with OPEC’s next meeting just a week away.

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

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