Australian Dollar lacks strength
06 October 2016 by News DeskAustralian Dollar: GBP AUD continued to advance on Thursday morning as demand for risk-correlated currencies has faded over the last few days.
While the risky Australian Dollar is currently being supported by strong sentiment due to bets of a long-term neutral stance from the Reserve Bank of Australia and decent commodity news, a strengthening US Dollar leaves AUD weaker, according to currency specialists TorFX
New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate mounted a solid recovery on Wednesday afternoon, as Sterling took advantage of weakness in the ‘Kiwi’ to return GBP NZD to around the week’s opening levels despite hitting all-time-lows on Tuesday.
Due to hitting new record-lows, GBP NZD came across significant psychological resistance.
The ‘Kiwi’ has also been weakened this week by dimming demand for risk-correlated currencies, and as the Australian Dollar is comparatively more appealing, investors have opted for the ‘Kiwi’s antipodean rival.
Australian Dollar lacks strength
Pound Sterling (GBP) – Sterling saw mixed sentiment throughout Wednesday trade. After briefly hitting fresh lows against multiple major currencies on Wednesday morning, GBP attempted to rebound later in the day.
The Pound saw little in the way of support from the week’s trio of better-than-expected September PMIs from Markit. While Manufacturing and Construction scores came in well above last month’s figures, Services still slowed from August’s score of 52.9, beating the predicted drop to 52.2 by hitting 52.6.
Critics of the Bank of England’s (BoE) aggressive August easing package were vindicated by these solid PMI scores, as well as critical comments towards ultra-low interest rates from UK Prime Minister Theresa May. As a result, Sterling recovered slightly in the afternoon.
US Dollar (USD) – The Pound to US Dollar exchange rate extended its worst levels in 31 years on Wednesday morning, but by the end of the day Sterling was able to push back and make a slight recovery against the sturdy ‘Greenback’. By Thursday morning however, GBP USD had slipped back to its lowest levels as Pound sentiment remained weak while the US Dollar was strengthened.
Wednesday’s US data was largely impressive. While the day’s employment data from ADP was underwhelming, other September ecostats came in well above expectations. Markit’s Services and Composite PMIs both beat preliminary scores and printed at 52.3.
ISM’s Non-Manufacturing Composite PMI leapt from 51.4 to 57.1 and August’s durable goods orders beat preliminary scores of stagnation by scoring a slow 0.1%. These figures bolstered bets of a December interest rate hike from the Fed and increased demand for the US Dollar.
Euro (EUR) – The Pound to Euro exchange rate hit five-year-lows on Wednesday morning before beginning recovery attempts later in the session. Unfortunately, the pair failed to reach the key level of 1.14 GBP/EUR.
The Eurozone’s own key data was unable to help the Euro hold its best levels against the Pound. While German Services and Composite PMIs improved slightly on preliminary figures, they still remained low and saw the Eurozone Composite PMI score come in at a 20-month-low of 52.6.
Thursday morning saw the publication of Germany’s August factory orders scores, which beat expectations by hitting 1.0% month-on-month and a solid 2.1% year-on-year. However, the Eurozone’s retail PMI disappointed by falling from 51 into contraction of 49.6 despite projections of an improvement to 51.2.
Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate hit lows not seen since August during Wednesday trade, and due to the market’s recent appetite for the ‘Loonie’ Dollar, GBP CAD has remained near these lows.
While Sterling was able to recover slightly against other peers, the Canadian Dollar held its ground as oil prices continued to improve. Oil markets have remained optimistic since OPEC member nations announced an oil output cap would be put in place in the coming months, with hopes that prices of the commodity will improve. The ‘Loonie’ could weaken on Thursday as oil prices begin to slip following the recent rally.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.
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