Australian Dollar rates suffer

31 August 2016 by News Desk   |   SHARE  

Investors continued to flock away from risk-correlated assets like the Australian Dollar towards safer investments

Australian Dollar trade suffered as the market moved to the US Dollar which has increased in demand considerably since last Friday, according to currency specialists TorFX

While the possibility is seen as low, there are now more bets that the Federal Reserve could hike rates in September.

The Australian Dollar may also have been slightly weakened by news that private sector credit had slipped from 6.2% to 6.0% year-on-year.

New Zealand Dollar (NZD) – The New Zealand Dollar struggled to maintain its levels on Tuesday for the same reason as the Australian Dollar, allowing Sterling to advance by around half a cent.

However, as the Reserve Bank of New Zealand’s (RBNZ) overnight rate is the highest in the developed market, the high-yield New Zealand Dollar remained more appealing than its Australian rival.

Australian Dollar rates suffer

Pound Sterling (GBP) – The Pound struggled to advance on Tuesday morning due to a disappointing UK mortgage sales report, revealing that mortgage approvals were worse-than-expected in July.

The figures from the Bank of England (BoE) showed a drop from 64,152 to 60,912 as a result of the Brexit vote result.

However, the Pound was able to advance against some majors in the afternoon thanks to a variety of factors. The increased appeal of the US Dollar weakened other currencies, allowing Sterling to advance. The Pound also benefitted from hopes surrounding the activation of Article 50.

On Wednesday morning, Sterling continued to edge higher vs. many major rivals. This was thanks to news that GfK’s August consumer confidence print was at -7, beating an expected -8. House prices had also improved since June, climbing from 5.2% to 5.6%.

US Dollar (USD) – The Pound to US Dollar exchange rate lost around quarter of a cent during Tuesday’s session as the sturdy Pound was beat down by a strengthening US Dollar.

The US Dollar continued to advance as Federal Reserve rate hike bets climbed.

Fed Vice Chairman Stanley Fischer followed up his Friday comments on Tuesday, remarking that the US economy was very close to full employment. This, as well as news that consumer confidence had rebounded from 96.7 to 101.1 in August, helped 2016 rate hike bets.

On Wednesday morning, two Fed officials spoke on interest rates. Both officials highlighted different risks to low interest rates, but this did little to move the US Dollar.

Euro (EUR) – The Pound to Euro exchange rate was able to advance on Tuesday, largely due to disappointing Eurozone news.

Eurozone confidence was down in all prints, including economic confidence, business climate, industrial confidence, services and consumer confidence.
The biggest downward factor for the Euro yesterday, however, was Germany’s disappointing preliminary August inflation figures.

According to the flash figures, consumer prices were stagnant at 0.0% month-on-month and the yearly score remained at 0.4%, failing to advance to 0.5%.
Analysts had been expecting price pressured to improve in August, and while the result may not influence monetary policy considerably it could make it more difficult for European Central Bank (ECB) policymakers to decide whether or not further action is necessary.

Currently, the consensus is that the ECB will hold off on further stimulus this year – but this also means that the Euro could fall considerably if these bets worsen.

German unemployment came in better-than-expected in Wednesday morning’s August report, lightening by 7k despite only 4k being expected.

Canadian Dollar (CAD) – The Canadian Dollar continued to weaken following its strong rallies earlier in August thanks to high Fed rate hike bets and further falls in the price of crude oil.

An increasing amount of analysts have suggested that a deal between oil-producing nations to curb the production of oil is still far away as many nations have different hopes for oil production. This caused prices of the commodity to drop to near three-year-lows, and the oil-correlated ‘Loonie’ lost appeal.

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

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