Australian Dollar sheds weekly gains
12 September 2016 by News DeskAustralian Dollar and risky currencies experienced a brief, solid burst of bullishness earlier in the week as US Dollar appeal fell.
Australian Dollar was impacted by underwhelming economic data that caused many investors to give up on near-term Fed rate hike bets.
But hawkish comments from Fed policymakers managed to change that by the end of the week, according to currency specialists TorFX
As a result, risky currencies fell in demand once again with Sterling soaring to just above the week’s opening levels vs the Australian Dollar.
The pair continued to trend higher when markets opened on Monday.
New Zealand Dollar (NZD) – The Pound advanced by over a cent versus the New Zealand Dollar on Friday as markets adopted a risk-off run following more hawkish-than-expected comments from Federal Reserve policymakers.
Even despite solid domestic and commodity news, the New Zealand Dollar struggled to hold its ground in the face of the shift in risk sentiment, continuing to fall on Monday.
Australian Dollar sheds weekly gains
Pound Sterling (GBP) – The Pound was able to recover slightly against most of its majors on Friday thanks to the day’s mixed ecostats, but investors were ultimately uncertain of the currency as the week came to an end.
Friday’s supportive ecostats included news that UK construction had been weak in July, but still managed to beat bearish forecasts of contraction. Another print that triggered a mixed response was July’s update of the UK trade balance – which improved from -£5,573b to -£4,502b. While this indicated that the low value of the Pound is helping to boost exports and lighten the deficit, some investors were disappointed that it did not lighten further.
Overall Sterling fell against a majority of its rivals last week after advancing since late August, thanks to concerns that UK growth would still be affected by the Brexit vote. Sterling saw mixed movement on Monday morning having lacked the support of overwhelmingly positive data since last week’s PMIs.
US Dollar (USD) – The Pound to US Dollar exchange rate felt a definite drop last Friday as US Dollar investors responded optimistically to surprisingly hawkish comments from Federal Reserve Boston President Eric Rosengren.
As Rosengren is typically more dovish, his comments that the US economy could overheat and overshoot its growth if monetary policy is not gradually tightened sent the ‘Greenback’ surging.
The US Dollar has felt considerably mixed movement in the last few weeks, as fresh August ecostats have continued to disappoint markets while hawkish Fed members attempt to jawbone markets into a better mood.
In the coming week, the US Dollar’s movement will once again respond to data and Fed comments as investors continue to readjust September Fed rate hike bets.
Euro (EUR) – The Pound to Euro exchange rate advanced slightly on Thursday thanks to a small boost from mixed UK datasets, including construction figures from July and news that the UK trade deficit had lightened in July.
Eurozone stats, on the other hand, disappointed markets. Following a surprisingly neutral stance from the European Central Bank (ECB) last Thursday, which bolstered Euro appeal, the Euro was weakened again by July’s German trade balance report.
The nation’s trade surplus fell from 24.7b to 19.5b, with exports contracting by -2.6% and imports dropping by -0.7%.
Similarly to the Pound, the Euro’s appeal was mixed on Monday, with investors still slightly optimistic on the shared currency due to last week’s ECB meeting.
Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate made a solid advance on Friday as the Canadian Dollar slipped in response to higher Federal Reserve rate hike bets.
In response to hawkish comments from typically dovish Fed policymakers, markets once again drew their focus towards the US Dollar and away from risk-correlated currencies like the ‘Loonie’. Dropping oil prices also undermined CAD on Friday.
Mixed Canadian ecostats also dented ‘Loonie’ appeal, as the nation’s key unemployment rate slipped from 6.9% to 7.0% in August. On the other hand, a higher-than-expected employment change of 26.2 may have helped the Canadian Dollar to hold its ground slightly.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.
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