Australian Dollar holds ground
12 October 2016 by News DeskAustralian Dollar, a risk-correlated currency, was weakened by a surge in demand for its ‘safe haven’ rival the US Dollar.
Australian Dollar however was able to hold its ground against a weak Pound, and by Wednesday the Pound to Australian Dollar was trending slightly below Tuesday morning’s levels – after recovering from a Tuesday night Sterling plunge, according to currency specialists TorFX
The pair will likely continue to see fluctuations as risk-sentiment remains solid but not strong enough to keep the Australian Dollar at its best levels.
The day’s Australian datasets may have given AUD a small boost, with Westpac’s consumer confidence print for October improving from 0.3% to 1.1%.
New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate fluctuated in a wide range during Tuesday trade, as investors struggled to decide their positions on the Pound.
The New Zealand Dollar continues to trend relatively poorly this week as it’s sold after hitting points of key psychological resistance last week.
Reserve Bank of New Zealand (RBNZ) Assistant Governor John McDermott reminded markets yesterday that the bank intended to cut NZ rates further in the near future, extending this week’s ‘Kiwi’ Dollar selloff.
Australian Dollar holds ground
Pound Sterling (GBP) – The Pound trended weakly for most of Tuesday’s session, giving up attempts to advance once again as ‘hard Brexit’ concerns continued to weigh on the minds of investors. Yesterday’s news indicating that UK growth could fall over 5.4% as well as news that the Treasury may have to pay up to £66b a year after the Brexit also pressured the Pound.
Bank of England (BoE) policymaker Michael Saunders commented on Tuesday, staying that he would not be surprised to see Sterling falling further and that the BoE would likely pay little mind to an increase in inflation caused by the cheaper Pound. Analysts believe this indicates that the bank would not hike rates until Consumer Prices hit over a considerable 3.5%.
GBP plunged during Tuesday’s American session to fresh lows. However, by Wednesday morning the currency had recovered back to Tuesday morning’s levels and trended largely flatly. News that UK Prime Minister Theresa May would allow a UK Parliament discussion on Brexit negotiations gave the Pound a little support, but this is not the vote on Article 50 many MPs had hoped for.
US Dollar (USD) – The Pound to US Dollar exchange rate continued to slip throughout Tuesday’s session, eventually tumbling to new lows. While GBP USD briefly plunged to all-new lows on Tuesday night, the pair had recovered nearer to the levels seen in Tuesday’s European session by Wednesday morning.
Sterling has recently seen its worst four-day performance since the days following the EU Referendum itself. Some analysts also believe that Sterling may not climb back to its higher post-Referendum levels any time soon due to the pressure of ‘hard Brexit’ concerns on the currency. British government officials have acknowledged and played down the threads of Sterling’s drop in value, indicating that they will not be attempting to jawbone it higher.
The US Dollar continued to increase in demand on Tuesday as US markets opened after Monday’s Columbus Day holiday. Bets of a Fed interest rate hike in December continue to increase, with the latest market futures suggesting a 70% chance of one. This is due to factors such as market stability and hopes for a smooth Presidential election.
Euro (EUR) – The Pound to Euro exchange rate trended largely flatly in Tuesday trade, before briefly plummeting in the evening of the American session as a strong US Dollar undermined Sterling appeal. The Pound recovered by Wednesday morning, and was trending near Tuesday’s best levels against the Euro.
Tuesday’s Eurozone data gave the Euro a little push, as ZEW’s October economic sentiment surveys for Germany and the Eurozone beat expectations. Germany’s current situation measure beat forecasts of 55.5 by improving from 55.1 to 59.5, while economic sentiment improved from 0.5, surpassed the expected 4 and hit 6.2.
Eurozone economic sentiment was impressive overall, improving from 5.4 to 12.3 in October. This indicated to markets that investors had recovered from concerns that the UK’s Brexit vote was going to cause the Eurozone significant damage.
Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate continued to trend flatly near Tuesday afternoon’s levels on Wednesday morning, as ‘Loonie’ sentiment remained strong enough to keep Sterling advances at bay.
While GBP CAD briefly plummeted on Tuesday evening, the pair recovered due to news that UK Prime Minister Theresa May would allow a discussion on Brexit to be held in Parliament.
The Canadian Dollar has recently trended strongly due to hopes that OPEC’s planned oil output cap will improve prices of Canada’s most lucrative commodity. The commodity and the ‘Loonie’ were boosted earlier in the week on comments from Russian President Vladimir Putin, who surprisingly came out in support of OPEC’s decision.
Despite this, influential Russian oil executive, Igor Sechin, claimed that his company would not be altering production. As a result, oil prices slipped later on Tuesday and left Canadian Dollar demand a little lighter on Wednesday.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.
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