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Australian Dollar rebounds from new low

17 October 2016 by News Desk

Australian Dollar to Pound lost almost two cents in value throughout the day. The pair rebounded slightly from its lows on Monday

Australian DollarAustralian Dollar was largely able to benefit from slightly mixed demand for the US Dollar on Friday, according to currency specialists TorFX

Comments from Fed Chairwoman Yellen hinting at longer periods of low interest rates left Fed rate hike bets lower, and as a result investors looked towards high-yielding risky currencies like the Australian Dollar in order to make profit.

During Tuesday’s Asian session, Reserve Bank of Australia Governor Philip Low will be making a speech in Sydney.

This will be followed by minutes from the RBA’s October policy meeting. If the RBA continues to indicate that Australian monetary policy will be left frozen long-term, this is likely to leave the Australian Dollar stronger for longer.

New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate plunged by around a cent on Friday, slipping to near record-low levels as a limp Pound was easily pushed back by a sudden increase in demand for risk-correlated currencies.

Better-than-expected Chinese inflation stats, as well as lower Fed rate hike bets, were some of the factors boosting risk-sentiment on Friday.

The New Zealand Dollar continued to trend strongly on Monday as investors poured into the currency ahead of Tuesday’s key NZ Consumer Price Index scores.

Markets also expect prices of dairy to improve in this week’s Global Dairy Trade auction. As a result, GBP/NZD extended its record lows on Monday and continued to trade near it’s lowest-ever levels throughout the morning.

Australian Dollar rebounds from new low

Pound Sterling (GBP) – The Pound saw a week of almost consistent sluggishness last week as its attempted recovery rallies failed. On Friday, the UK currency once more trended limply, remaining close to historic lows against most peers.

Friday’s UK data did little to assist the increasingly Brexit-correlated Pound. Construction scores from the Office for National Statistics (ONS) revealed that the sector had contracted -1.5% in August, well below an expected improvement of 0.2%. However, this score had little to do with the Brexit vote, and as a result it didn’t improve Sterling trade considerably.

On Monday morning Rightmove’s October house prices report for Britain improved over previous scores, advancing from 4.0% to 4.2% year-on-year, but the data had little impact on Sterling.

US Dollar (USD) – The Pound to US Dollar exchange rate continued to slip throughout last week’s session as the US Dollar firmed. GBP/USD lost over two cents in value throughout the week.

US data impressed investors throughout the week, adding to USD strength that was largely provided by higher bets for a December Federal Reserve interest rate hike. It was slightly bolstered by the US advance retail sales scores for September, which improved to 0.6% as expected. August business inventories also improved from 0.0%, beating expectations of 0.1% and reaching 0.2%.

Despite this, USD sentiment was left mixed after a Friday speech from Fed Chairwoman Janet Yellen. In a statement, Yellen may have hinted at lower chances of a December rate hike by putting forward the idea of a ‘high-pressure economy’ in order to lower unemployment and boost consumption despite risks of overshooting inflation. Investors reacted bearishly to the possibility of inflation overshooting the Fed’s 2.0% target. Yellen’s comments also had a poor effect on December rate hike bets, which slipped to 64%.

Euro (EUR) – The Pound to Euro exchange rate was able to end last week just slightly above opening levels, as a Euro weakened by factors such as European Central Bank (ECB) jitters and a strong US Dollar allowed even a limp GBP to hold steady.

While the Pound to Euro exchange rate remains near its worst levels in seven years, it could make a stronger recovery later this week if the European Central Bank (ECB) disappoints markets.

The ECB is speculated to be tapering back its quantitative easing program, but this market speculation does not have a strong chance of turning out true, according to analysts. Investors may be disappointed if the ECB leaves policy frozen in its Thursday meeting, and sell off the Euro as a result.

Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate plummeted last week, tumbling gradually throughout the week and losing around 5 cents in value overall as the Canadian Dollar continued to be boosted by high hopes for OPEC’s planned oil output cap deal.

The Canadian Dollar was also boosted towards the end of last week by a sudden market increase in risk-sentiment, allowing the ‘Loonie’ to make solid gains against Sterling on Friday.

However, after weeks of solid rallying on oil price hopes, the Canadian Dollar trended a little more flatly on Monday. Almost mirroring the movements of Canada’s most lucrative commodity, oil, the ‘Loonie’s rally wore off as prices of oil began to fall due to increased oil production in the US. A strong US Dollar also affected prices of the commodity, which are priced in USD.

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

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