Australian Dollar edges higher
04 August 2016 by News Desk
Australian Dollar watchers were buoyed as the Aussie’ remained in good favour despite the Reserve Bank of Australia’s interest rate cut on Tuesday, according to currency specialists TorFX
The Australian Dollar was able to easily advance on Sterling on Thursday morning as the Pound weakened ahead of the BoE’s vital rate decisions.
Even poor Australian retail sales figures, slowing from 0.2% to 0.1%, couldn’t keep investors away from a rebelliously strong Australian Dollar.
New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate gained around a cent and a half on Wednesday, as a strengthening Sterling was able to capitalise on a weaker ‘Kiwi’.
Despite optimistic commodity news earlier in the week, the New Zealand Dollar is likely to remain pressured for the coming week as market bets of a Reserve Bank of New Zealand (RBNZ) rate cut are as high as 96%.
The RBNZ recently issued a sudden economic update, which signalled to markets that the central bank was poised to take action at the earliest opportunity – its policy meeting on the 11th of August.
Australian Dollar edges higher
Pound Sterling (GBP) – Yesterday’s final July UK PMI report from Markit confirmed many investor fears by revealing that UK economic activity shrank at its fastest pace since 2009 – which was the middle of the financial crisis.
The UK’s vital services sector met preliminary scores of 47.4. Unfortunately, due to a highly disappointing Manufacturing PMI on Monday, the Composite score worsened from the preliminary score of 47.7 to a depressing 47.5. This meant that not only had Brexit panic caused the UK’s economy to contract, but that it had contracted by more than projected.
Despite this, Sterling attempted to advance against most major rivals throughout the day as investors readjusted the currency higher ahead of the Bank of England’s (BoE) ‘Super Thursday’ trio of announcements.
The bank is highly expected to act today in response to recent economic news, and could introduce anything from a simple interest rate cut of 0.25% to a more aggressive package including stronger rate cuts and other quantitative easing measures. Sterling will likely drop in response to the news, but its fall may be muted if the policy adjustments are underwhelming.
Australian Dollar edges higher
US Dollar (USD) – The Pound to US Dollar exchange rate held its ground near two week highs on Wednesday, unable to advance considerably as investors returned to both the Pound and the ‘Greenback’. GBP/USD began to sink once more on Thursday morning, ahead of the Bank of England’s key monetary policy decisions.
Analysts have suggested that if Britain’s growth outlook continues to struggle on the downside, the pair could extend its recent three-decade lows. This trend could resume if the BoE opts to introduce aggressive easing measures today.
The US Dollar recovered strength yesterday after struggling since the Federal Reserve’s decision to leave US rates frozen. A surge into the Japanese Yen following an underwhelming BoJ stimulus decision also undermined US Dollar strength. Unfortunately, the Dollar’s appeal was undermined slightly in Wednesday’s American session by a disappointing Services/Non-Manufacturing Composite PMI from ISM, which came in at a much lower-than-expected 55.5.
Euro (EUR) – The Pound to Euro exchange rate gained around half a cent during Wednesday trade as investors adjusted Sterling higher ahead of Thursday’s key UK session.
Eurozone news had actually been largely positive, but the shared currency itself was left limp as other major currencies demanded attention and drove Wednesday trade.
While German Services PMI failed to meet preliminary figures of 54.6, slipping to 54.4, it maintained its preliminary Composite PMI score of a relatively healthy 55.3. The Eurozone’s overall figures were even more optimistic, with Services scoring a total of 52.9 across the bloc (better than the preliminary 52.7) and Composite reaching 53.2.
This was not only better than the preliminary figure of 52.9, but better than June’s figure of 53.1. Markets had previously presumed that the Eurozone’s outlook could considerably damaged by the Brexit vote. However this result seemingly confirmed that not only had the bloc been resilient, activity had actually improved month-on-month.
Canadian Dollar (CAD) – The Canadian Dollar held its ground firmly against the Pound on Wednesday and began to push GBP down more decisively on Thursday as a rebound from the three-month-low in oil prices finally gave the ‘Loonie’ some relief.
Oil prices have kept the Canadian Dollar trending with a pressured, downward bias since late June. Since falling to below US$40 per barrel earlier this week, prices of the liquid commodity have begun to gain again, climbing to almost US$41 a barrel and boosting the appeal of the oil-correlated ‘Loonie’.
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