Australian Dollar slips over trade data

13 October 2016 by News Desk   |   SHARE  

Australian Dollar was impacted as markets reacted to fresh US Presidential election polls and indulged in another brief risk-correlated rally.

Australian Dollar moved after Wednesday polls revealed that Democrat nominee Hillary Clinton’s lead over Republican Donald Trump appeared to be increasing.

Due to familiarity with Clinton’s economic plans, this has indicated market stability to investors and as a result traders felt secure buying into riskier assets, according to currency specialists TorFX

However, the Australian Dollar slipped in early Thursday trade due to a highly disappointing slew of September Chinese trade data.

As China is Australia’s largest trade partner, this dampened ‘Aussie’ sentiment.

New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate initially trended strongly on Wednesday, but slipped lower and lower throughout the day as the market’s ‘Kiwi’ selloff began to cool.

The risky New Zealand Dollar had been sold from levels of key psychological resistance since last week thanks to expectations of a Reserve Bank of New Zealand (RBNZ) interest rate cut in the coming months.

However, the ‘Kiwi’ is still a high-yielding currency, and as a result it has benefitted from this week’s limited risk-correlated market movements. On Thursday, GBP/NZD remained near record-lows.

Australian Dollar slips in early Thursday trade

Pound Sterling (GBP) – The Pound saw another day of familiar movement on Wednesday, attempting to advance earlier in the day before giving up its gains and slumping in the evening on the latest ‘hard Brexit’ concerns.

GBP initially advanced as UK Prime Minister Theresa May promised to hold a debate in Parliament over Brexit negotiations. However, the currency later reversed its advances and trended near the day’s lows again, as Brexit Secretary David Davis indicated that the UK would not be fighting for access to the European Union’s single market.

Both Davis and May reminded markets that the government would decide on the terms of a Brexit as well as the timing of Article 50. As a result, trade-weighted Sterling value remained just above the record-low seen earlier this week and could slip further. An improved house price balance from RICS in September didn’t offer Sterling much support on Thursday.

US Dollar (USD) – The Pound to US Dollar exchange rate was able to hold above its worst levels on Tuesday, but continued this week’s trend of gradually tumbling lower regardless as the US Dollar increased in demand while Sterling was limp on ‘hard Brexit’ concerns.

As of Thursday morning, GBP/USD had once again neared the lows seen on Tuesday night, and could be on track to hit new 31-year-lows in the coming days. Goldman Sachs is currently predicting that ‘Cable’ will lose an additional -7% in value over the next year.

The US Dollar saw strengthening demand once more on Wednesday. This time, the currency was boosted by a fresh Federal Reserve minutes report which revealed that September’s decision to leave rates frozen was close. This indicated that many of the bank’s policymakers had the intention of hiking US interest rates, which led to another increase in December rate hike bets.

Euro (EUR) – The Pound to Euro exchange rate attempted to hold its ground for most of Wednesday’s session and even made a slight advance earlier in the day, after recovering from Tuesday night’s brief plunge. However, reminders from UK officials that the UK was likely to see a ‘hard Brexit’ kept the pair near its daily lows.

This week’s GBP /EUR exchange rate outlook remains on the downside, as Eurozone data continues impressing and speculation of the European Central Bank (ECB) tapering its quantitative easing scheme is causing excitement among investors.

Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate was weak yesterday despite mixed news within oil markets holding the Canadian Dollar back from its best performance. GBP/CAD initially attempted to return to Monday’s levels, but another drop off in Sterling demand saw this recovery attempt fail.

Markets expressed doubt in the possibility that Russian oil producers would assist in OPEC’s oil output cap deal due to fresh comments made by leading oil Russian officials. As a result, prices of Canada’s most lucrative commodity slipped and the ‘Loonie’ Dollar lost much of its earlier bullishness. GBP/CAD trended more flatly on Thursday.

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

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