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Australian Dollar maintains its ground

12 August 2016 by News Desk

Australian Dollar held its ground on Friday following a particularly bullish week for the currency.

Australian DollarAustralian Dollar – Despite the possibility for further Reserve Bank of Australia easing and a drop in prices for the iron ore commodity, the Australian Dollar resisted other currency advances after enjoying solid gains for much of the week, according to currency specialists TorFX.

New Zealand Dollar (NZD) – The GBP/NZD exchange rate struggled to recover from the New Zealand Dollar’s bullish run on Thursday. The ‘Kiwi’ surprised markets by soaring following the Reserve Bank of New Zealand’s (RBNZ) latest interest rate cut, but Sterling was able to regain much of its lost value on Thursday evening as the ‘Kiwi’s sturdiness waned.

The New Zealand Dollar continued trending with a downward bias on Friday as investors sold the currency off from its high levels and settled on more appealing risk-correlated currencies like the Canadian Dollar. However, GBP/NZD is unlikely to recover far due to a general lack of Sterling appeal.

Australian Dollar maintains its ground

Pound Sterling (GBP) – Yet more news was released on Thursday indicating that the Brexit vote had harmed the UK’s economy more than expected, as the Royal Institute of Chartered Surveyors (RICS) published its latest house price balance report.

June’s house price balance was revised down to 15%, while July’s score came in at a worse-than-expected 5% (analysts had expected 6%). This was due to lower sales enquiries and asking prices around the country. The data was placed on the top of an increasing pile of gloomy post-Brexit figures that include July’s PMIs.

It is highly unlikely that Sterling will recover today, with UK construction figures for July out this morning. UK construction has struggled recently regardless of the Brexit vote, and as a result the sector is expected to have contracted by -2.1% in June.

US Dollar (USD) – The Pound lost around half a cent against the US Dollar on Thursday as the ‘Greenback’ continued to recover from its Wednesday selloff.

USD has experienced mixed movement over the past week, with last Friday’s labour figures giving the currency a significant boost due to what was perceived to be an increased chance of Federal Reserve rate hikes taking place in 2016. However, data earlier this week revealed that US productivity had dropped for its third consecutive quarter which caused Fed hike bets to drop once again.

The US Dollar continued this mixed behaviour on Friday morning as markets seemed unconvinced by hawkish comments from San Francisco Fed President John Williams. Williams claimed that the Fed should hike interest rates in 2016. Markets may instead be waiting for Friday afternoon’s key US figures, including July retail sales and a confidence survey report from the University of Michigan, before they buy into the Dollar.

Euro (EUR) – The Pound to Euro exchange rate continued its weekly tumble on Thursday, falling ever-closer to below the key level of 1.16. While GBP/EUR has recovered from the near three-year-low of 1.1597 it dipped to on Thursday, it continues to trend on the downside and trades near these lows on Friday.

Friday’s slew of Eurozone data has come in strong thus far, with July German Consumer Price Index (CPI) scores matching decent preliminary figures of 0.3%, and German Gross Domestic Product (GDP) beating expectations. German growth was expected to have slowed from 0.7% to 0.2% from Q1 to Q2, but slowed less-than-expected to hit 0.4%.

This brought the yearly score from a positively revised 1.9% to 1.8%, avoiding an expected slip to 1.4%. Price-adjusted German GDP rose at 3.1% in Q2, the biggest increase in five years.

If other Eurozone growth figures beat expectations, the Euro could continue to trend solidly and even advance on Friday, taking GBP/EUR down to new lows.

Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate plunged on Thursday as demand for the oil-correlated ‘Loonie’ Dollar soared on the day’s news. A statement from Saudi Arabian oil minister Khalid al-Falih caused prices of oil to make a surprise rally during Thursday’s session.

Khalid al-Falih remarked that oil-producing nations could agree on measures to cap oil output in some way during a meeting in Algeria next month. Oil investors have been hoping for some kind of oil-production cap for a long time, with the recent oil-price crisis largely due to a glut in supply.

Oil prices rallied above US$40 per barrel by Friday in response to the news, and the ‘Loonie’ Dollar continued to edge higher on Friday as a result.

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