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Australian Dollar strengthens

22 November 2016 by News Desk

Australian Dollar gave up its strength due to the day’s low demand for risky assets, but on Tuesday GBP/AUD slipped again as the ‘Aussie’ strengthened.

Australian DollarAustralian Dollar was boosted by various factors such as comments made by UK PM Theresa May on the possibility of a less-painful Brexit process for businesses; a weaker US Dollar as well as stronger prices in stocks, crude oil and iron ore, according to currency specialists TorFX

While oil prices typically benefit the Canadian Dollar, CAD has already seen significant gains in the last week.

Instead of remaining bullish on the Canadian Dollar, traders bought up the Australian Dollar from its lowest levels.

New Zealand Dollar (NZD) – The Pound to New Zealand Dollar advanced on Monday due to higher hopes in UK markets that the Brexit process could include a business-friendly transition period.

However, the New Zealand Dollar remained sturdy as traders continued to buy it from its lows amid a session of weakness in the US Dollar. As a result, GBP/NZD’s Monday gains were limited and the volatile exchange rate continued to fluctuate on Tuesday, just barely higher than the week’s opening levels.

Australian Dollar strengthens

Pound Sterling (GBP) – The Pound soared across the board during Monday’s trade session. While the British currency initially slumped as it was sold off from last week’s bullish highs and on renewed Brexit worries, it got an unexpected leg up in the afternoon thanks to a speech made by UK Prime Minister Theresa May.

May spoke at this week’s CBI conference in an attempt to ease business fears. She indicated that the government would aim to negotiate a Brexit transition period that would see the UK gradually withdraw from the European Union in order to ease businesses into the new economic environment, over a period of months or years.

As a result of this hint, the Pound surged, climbing to new highs against many rivals. Sterling was able to hold many of these highs on Tuesday morning.

US Dollar (USD) – The Pound to US Dollar exchange rate surged on Monday. The pair opened the week relatively flatly as both the Pound and US Dollar volatility seen in the last few weeks subsided, but Sterling eventually surged higher on hopes for a Brexit transition period.

‘Greenback’ trade cooled considerably on Monday. The US currency had been bullish ever since the US Presidential election, when hopes of short-term economic stimulus from President-elect Donald Trump, as well as solid domestic data, left US traders optimistic. Last week, bets on the chances of a December rate hike from the Federal Reserve reached over 90%. However, with a rate hike now priced in and the US Dollar having rallied for at least 7 solid sessions, the currency was sold from its highs on Monday in a bout of profit-taking.

The US Dollar remains sensitive. If President-elect Trump indicates he will be as anti-trade in practise as he had been on the campaign trail markets could panic despite their recent bullishness.

Euro (EUR) – The Pound to Euro exchange rate hit its highest levels since mid-September on Monday afternoon as hopes of a Brexit transition period left UK markets more optimistic.

While not nearly as bullish, the Euro saw its most solid performance in over a week against some currencies, including the US Dollar. Some traders bought the shared currency up from its lowest level after last week’s plunge, while others were cheered by Eurozone political news.

News that German Chancellor Angela Merkel would be standing for a fourth term in office for 2017’s German election gave hopes against rising populism in Germany. Meanwhile, the surprisingly strong performance of François Fillon in France’s Republican party primary offered hope that a popular candidate would stand against protectionist Marine Le Pen and her National Front party.

Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate gained around half a cent in value on Monday as traders went bullish on Sterling once again. GBP/CAD’s gains were limited throughout the day by strength in the Canadian Dollar.

The ‘Loonie’ has continued to perform strongly this week as prices of oil – Canada’s most lucrative commodity – continued to rise ahead of next week’s OPEC meeting. Oil producing members of OPEC are set to lay out oil output cut plans in its next meeting and oil producers from outside of OPEC have also expressed interest in joining the talks. This has left traders bullish on oil. As a result, the Canadian Dollar quickly began to recover against the Pound on Tuesday.

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

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