Australian Dollar pushed lower

19 September 2016 by News Desk   |   SHARE  

Australian Dollar appeal was boosted by a gradual return of demand for riskier currencies due to low bets of Federal Reserve rate hikes. On Friday it was also able to easily take advantage of the day’s Sterling selloff.

The Pound to Australian Dollar continued to drop on Monday morning as traders became increasingly confident that the Fed would not hike rates this week.

Markets looked past the Australian Dollar and instead looked to higher yields, according to currency specialists TorFX

New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate saw a similar situation to GBP/AUD on Friday and Monday morning, losing around two cents in value on Friday.

And it continued to dip on Monday as market demand for risk-correlated currencies finally began to increase.

Monday’s Asian session saw the publication of New Zealand’s Westpac consumer confidence report for Q3, which improved from 106.0 to 108.0.

August’s performance services index report improved from 54.5 to 57.9. These scores may have bolstered NZD demand on Monday morning.

Australian Dollar pushed lower

Pound Sterling (GBP) – The Pound suffered losses against many of its major rivals on Friday due to fresh bets that the currency would remain near its lower levels, hindering Sterling demand. Comments made by Bank of England (BoE) policymaker Kristin Forbes also weakened the currency, as she appeared to embrace a weaker currency.

She stated that the low value Pound could improve Britain’s net foreign asset position by over 20% of Gross Domestic Product (GDP). With BoE rate cut bets high and the potential of poor September ecostats ahead, the Pound’s recovery attempts may be limited. However, it bounced back from its worst levels against the Euro and Dollar on Monday morning.

US Dollar (USD) – The Pound to US Dollar exchange rate lost over two cents during Friday’s session, hitting its worst levels in around a month. Bank of England (BoE) comments and speculation weakened the Pound, while the US Dollar was thrust upward by an unexpectedly solid Consumer Price Index (CPI) report.

According to the report, inflation beat expectations in all major prints, scoring 0.2% month-on-month and improving from 0.8% to 1.1% year-on-year. As this beat projections of 1.0%, investors piled into the US Dollar ahead of this week’s Federal Reserve policy meeting.

The Fed is not expected to introduce new monetary tightening this week, meaning the US Dollar could drop in the coming week as investors give up on the possibility of a rate hike before December.

Euro (EUR) – The Pound to Euro exchange rate dipped by over a cent on Friday evening as bets of further Bank of England easing weighed heavily on Sterling appeal. While the bank had already hinted that further easing was likely in its Thursday meeting, comments from policymakers such as Kristin Forbes hinted that this easing bias could extend over a long-term period.

Euro sentiment, on the other hand, weakened due to certain concerns about how the Brexit vote may have affected confidence in the European Union. EU leaders held a meeting in Bratislava to discuss ways of regaining citizen trust, as well as ongoing economic issues. German Chancellor Angela Merkel claimed that the EU was in a ‘critical situation’, which weighed on Euro confidence.

While the Euro advanced against Sterling on Friday, it gave up a lot of these gains on Monday, potentially due to this EU anxiety.

Canadian Dollar (CAD) – The Canadian Dollar saw mixed movement on Monday morning after seeing similar movement to its risk-correlated peers on Friday afternoon. The Pound to Canadian Dollar exchange rate plunged by over two cents on Friday as the Pound was sold off and demand for riskier currencies increased.

However, on Monday morning the Canadian Dollar fluctuated in a wide range. The ‘Loonie’ struggled to advance too high as oil supply glut concerns weighed on its appeal. However, the Canadian Dollar could strengthen again later in Monday’s session if markets react optimistically to news that more nations, including Venezuela, believed in the possibility of an oil production freeze deal.

Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.

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