Australian Dollar hits highest levels
14 September 2016 by News DeskAustralian Dollar and other risk-correlated currencies continued to fall due to market-wide risk-off movement.
Australian Dollar was easily beaten down by most of its non-risk rivals on Tuesday as investors generally losing appetite for commodities amid dire oil news, as well as the current market focus on the US economy and Federal Reserve, according to currency specialists TorFX
The Australian Dollar also failed to be boosted on Wednesday morning as Westpac’s September consumer confidence report came in at a low 0.3%.
As a result, the Pound to Australian Dollar exchange rate was able to hold away from the day’s worst levels and by Wednesday was still trending above the week’s opening levels despite Tuesday’s GBP selloff.
New Zealand Dollar (NZD) – The Pound was able to advance against the New Zealand Dollar on Tuesday, with the GBP/NZD exchange rate fluctuating about half a cent higher due to low demand for risk-correlated currencies in the forex market.
Even if markets continue this risk-off movement, the New Zealand Dollar could recover slightly if Thursday morning’s Q2 New Zealand Gross Domestic Product (GDP) score impresses. Growth is expected to increase from 0.7% to 1.1% month-on-month and from 2.8% to 3.6% year-on-year.
Australian Dollar hits highest levels
Pound Sterling (GBP) – The Pound fell in value against most major rivals on Tuesday as investors responded bearishly to August’s British Consumer Price Index (CPI).
The report revealed that inflation remained at 0.6% year-on-year, letting down market hopes of an increase to 0.7%. Analysts had been speculating that the low value of the Pound causing higher import prices would have now translated to the high street, but consumer inflation remained steady near its July levels.
Sterling plummeted in response to the news as it indicated that inflation would not spike high enough to dissuade the Bank of England (BoE) from introducing further stimulus measures.
There had been speculation that August’s economic performance was solid enough to persuade the BoE to hold on further stimulus or even go back on some of August’s aggressive easing measures. However, analysts now expect the BoE to keep the door open for further easing in the coming months.
US Dollar (USD) – The Pound to US Dollar exchange rate lost over a cent throughout Tuesday’s session as investors indulged in a mass Pound selloff following the day’s underwhelming inflation scores.
As for the US Dollar, the currency has remained especially sensitive to bets of a Federal Reserve rate hike bet. Recent comments from Fed officials such as Lael Brainard weighed on the Dollar earlier in the week, but despite Fed rate hike bets remaining low since then the Dollar was relatively sturdy on Tuesday.
Many investors may already see the lack of a September rate hike priced into the value of the Dollar, meaning the ‘Greenback’ may be able to hold above key levels of psychological resistance despite low Fed bets. However, continued slews of poor US data could still undermine the US Dollar.
Euro (EUR) – The Pound to Euro exchange rate lost around a cent and a half in value on Tuesday, hitting a two-week-low as investors sold off the Pound following a disappointing August inflation report.
The Euro, on the other hand, was given limited support thanks to a fresh economic sentiment survey result from ZEW. According to ZEW’s September print, sentiment had improved from 4.6 to 5.4 throughout the bloc.
Underwhelming German scores prevented the Euro from making the most of the day’s advances, however. German inflation matched low preliminary scores of 0.4% year-on-year and a stagnant 0.0% month-on-month.
Meanwhile, ZEW’s German current situation fell from 57.6 to 55.1 and economic sentiment remained at 0.5, letting down hopes of an increase.
Canadian Dollar (CAD) – Prices of oil, Canada’s most lucrative commodity, continued to be an obstacle for the risk-correlated Canadian Dollar on Tuesday, as the currency struggled to make a solid advance against the Pound due to yet another drop in commodity prices. A new forecast from the International Energy Agency (IEA) indicated that oil supply would remain in its current glut until well into 2017, which weighed on price recovery hopes and saw oil prices fall almost -3%.
However, GBP/CAD was unable to hold its highs due to Britain’s underwhelming August inflation figures. As a result, the pair edged slightly lower throughout the day, but remained above the week’s opening levels.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.
Learn more about the Australian Dollar – Contact TorFX: Get A Quote
Want to live and work Down Under? Click here for expert help: Skilled Migration to Australia
Want to get a job Down Under? Click here for expert help: How to Get a Job in Australia
Click here for expert help with travel visas: Travel Visas to Australia
Click here for expert help with Study Visas: Student Visas in Australia
Click here for tourist information about Australia: Visit Australia
