Australian Dollar continues advance

17 November 2016 by News Desk   |   SHARE  

Australian Dollar continued advancing on Thursday morning taking it much closer to the week’s opening levels.

Australian Dollar was pushed down by a number of factors, including Wednesday’s disappointing Australian wage cost report, showing wages had slowed to 1.9% year-on-year in Q3, according to currency specialists TorFX

Falling prices in iron ore, Australia’s most lucrative commodity, also weighed on AUD.

Thursday’s Asian session saw the publication of Australia’s October employment scores, which were also largely disappointing.

While many more people joined full-time employment, the overall employment change was a lower-than-expected 9,800 and the unemployment rate fell due to the participation rate not improving as expected.

As a result, the ‘Aussie’ was sold against many rivals, allowing GBP/AUD to advance.

New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate failed to hold its ground on Wednesday despite weakness in the New Zealand Dollar.

NZD demand began to return after half a week of natural-disaster jitters and the Pound edged lower as a result.

While evacuation efforts are ongoing, NZ markets cooled slightly from the chaos earlier in the week.

However some analysts believe the New Zealand Dollar still has further to fall and GBP/NZD could continue advancing if the Reserve Bank of New Zealand (RBNZ) hints at further monetary stimulus in the coming weeks.

Australian Dollar continues advance

Pound Sterling (GBP) – The Pound was able to edge higher against most of its major rivals on the back of mixed UK employment data. September’s UK employment results indicated that the first three months since the Brexit vote were good months for employment, with the key unemployment rate hitting an 11-year-low of 4.8%.

However, October’s jobless claims report wasn’t as optimistic. 9,800 people filed jobless claims in October, and September’s jobless claim count was revised from 700 to 5,600. This led some analysts to suggest that employment may begin to be affected negatively by the Brexit vote in the coming months.

US Dollar (USD) – The Pound to US Dollar exchange rate trended relatively flatly throughout Wednesday. While Sterling advanced slightly against most other currencies, the US Dollar was also sturdy enough to hold its ground on increasingly high bets of a Federal Reserve interest rate hike taking place in December. Hawkish comments continue coming from Federal Reserve officials too.

James Bullard and Patrick Harker both stated that they supported an interest rate hike in a few weeks’ time unless any major shocks materialise.

Increased Fed rate hike bets are beginning to have a weakening effect on the US Dollar however. USD has performed strongly since last week and bets have risen to over 90%, meaning they may not rise much more.

Markets have now largely priced a December rate hike into the US Dollar, meaning the ‘Greenback’ needs new impetus to give it a boost. With the ‘shock’ of Donald Trump winning last week’s US election absorbed, it seems unlikely that anything else will be enough to dissuade markets from betting on a December rate hike.

Euro (EUR) – The Pound to Euro exchange rate edged higher on Wednesday, but by Thursday morning had fallen back slightly to trade on key support levels instead of continuing this advance. Britain’s Wednesday employment news was not enough to support a rally, and GBP/EUR’s strength was partially due to weakness in the Euro.

Traders continued to be wary of buying into the shared currency on concerns that rising populism within the Eurozone has the potential to threaten the Euro project. Calls from the European Commission for additional fiscal stimulus from governments throughout the Eurozone also weighed on the Euro.

Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate fell on Wednesday as lasting sentiment from Tuesday’s oil price surge gave the ‘Loonie’ significant ground to advance.

Hopes that OPEC’s plan to cut oil output and boost prices will succeed continued rising on Wednesday after comments from Russia’s energy minister Alexander Novak indicated Russia was willing to meet with Saudi Arabian oil producers in order to make a deal to cut output.

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

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