Australian Dollar strengthens after rebound
14 November 2016 by News DeskAustralian Dollar was impacted by fears of an anti-trade USA under President-elect Donald Trump.
Australian Dollar has suffered from Trump’s heavily protectionist rhetoric during his election campaign, according to currency specialists TorFX
While his transition team have yet to express the kind of fiery protectionism seen in the Presidential race, the possibility of weaker trade ties between the US and trade-heavy countries like Australia weakened Australian Dollar considerably last week.
However, the Australian Dollar strengthened on Monday as investors rebounded from last week’s selloffs and bought the currency back from its cheapest levels.
New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate ended last week at near its best levels in over five weeks after trending just around its worst levels on record for over two weeks.
While the New Zealand Dollar recovered slightly on Monday, like its commodity-correlated peers, demand for the currency was heavily weighed down by the weekend’s news of a magnitude 7.5 earthquake in North Canterbury.
The disaster has also led to warnings of a tsunami, leaving New Zealand citizens and markets anxious.
Australian Dollar strengthens after rebound
Pound Sterling (GBP) – After rallying for the latter half of last week on hopes of stronger trade relations between the UK and US, Sterling slumped when markets opened on Monday this week.
Investors had bought into UK government bonds last week due to fears over the impact of a Trump presidency, which helped the Pound sustain a solid recovery. However, as US government bonds became more appealing due to Trump’s plans to spend more money to boost the US economy, investors chose to sell UK bonds in favour of these.
US Dollar (USD) – The US Dollar strengthened on Monday as investors continued to hope that Trump’s proposed spending measures would spike up US inflation. This has led to bets of tighter monetary policy from the Federal Reserve, as well as higher demand for US government bonds, all of which have improved trader appetite for the US Dollar.
On the other hand, though, the ‘Greenback’ could still fall in the coming days or weeks if Trump or his team begin to indicate once more that they will become stricter on trade and immigration, as both these factors typically help the US economy.
Euro (EUR) – The Pound to Euro exchange rate hit a seven-week-high during last Friday’s trade session and was able to hold this value for most of Monday morning due to lower demand for the Euro.
As US government bonds began to look more appealing than Eurozone bonds, investors sold their securities and converted their Euros back into US Dollars. Ongoing concerns that nationalistic populist practises could become more popular in the Eurozone after this year’s UK and US votes have also weighed heavily on Euro demand.
The Euro is currently seeing intense politically-correlated movement and future news of the European Union’s potential relationship with a Trump US are likely to become the biggest long-term concerns for Euro traders.
Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate continued to soar towards the end of last week’s trade session as investors lost interest in risky currencies amid concerns of an anti-trade Trump USA.
79% of Canada’s exports are to the US, so any potential harm between the US and Canada’s trade relations could cause significant damage to Canada’s economy.
However, the ‘Loonie’ strengthened on Monday as risky currencies rebounded from last week’s mass selloffs. This was despite news that oil prices had once again slipped to multi-month lows on oversupply fears.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.
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