Australian Dollar strong position
22 August 2016 by News Desk
Australian Dollar investors were content to sell the ‘Aussie’ from its highs. However, GBP/AUD plunged amid speculation on the trigger date for Article 50 allowing the weakened Australian Dollar to capitalise, according to currency specialists TorFX
The Australian Dollar continued to trend limply on Monday as risk-sentiment remained low, and market attention turned towards the US.
While the US Dollar advanced on hawkish Federal Reserve statements, the US Dollar’s commodity-correlated rivals slipped. The Australian Dollar remains in a strong position and will be among the currencies investors buy up first if the Fed disappoints this week.
New Zealand Dollar (NZD) – The GBP/NZD exchange rate lost around half a cent on Friday, as Article 50 speculation led to Sterling falling across the board.
Similar to its antipodean peer, the New Zealand Dollar slumped on Monday as hawkish Federal Reserve statements led markets away from risky investments.
Recent New Zealand economic news has been decent, and prices of New Zealand’s key commodity, dairy, are improving. Despite a Reserve Bank of New Zealand (RBNZ) rate cut, New Zealand’s interest rate is one of the highest in the developed world, making the risky New Zealand Dollar a premiere choice for investors looking for a high-yield currency.
If Friday’s Jackson Hole symposium disappoints, the ‘Kiwi’ will surge – but could drop further if Fed rate hike bets increase.
Australian Dollar strong position
Pound Sterling (GBP) – Sterling gave up many of its recent gains on Friday as investors reacted to reports claiming that Article 50 could be activated before April 2017.
Article 50, the documentation needed to formally begin the exit process from the EU, has been a point of heavy speculation since the Brexit vote in late June.
Markets are generally bearish on the activation of Article 50, particularly with Britain’s economy in its current state of economic and trade uncertainty.
While the report caused Sterling to plummet on Friday, a following statement from Downing Street officials claimed that the report was false. This may have allowed Sterling to recover slightly on Monday, but the currency remained below many key levels.
US Dollar (USD) – The Pound to US Dollar exchange rate lost almost a Dollar on Friday as the US Dollar regained strength while Sterling plunged once again.
Hawkish remarks for the Federal Reserve ahead of this week’s key Jackson Hole symposium left the ‘Greenback’ in a solid position.
Federal Reserve Vice Chairman Stanley Fischer claimed that the US economy was ‘close to’ targets in a statement made over the weekend, cheering up a slightly gloomy market who were all but giving up on the chance of a 2016 interest rate hike from the Fed.
While the Dollar advanced on the news, its movements may be limited as markets await Friday’s global conference held in Wyoming, USA at which central banks will discuss ‘resilient monetary policy frameworks for the future’. Fed Chair Janet Yellen is expected to make a speech during the meeting, which will be highly influential for the Dollar and potentially other currencies too.
Euro (EUR) – The Pound to Euro exchange rate lost around half a cent on Friday, falling from near Thursday’s weekly high as investors reacted to the report claiming that the UK could begin the formal Brexit process by April 2017. Despite this report quickly being debunked, it still allowed Sterling to plummet despite the week’s optimistic UK news.
The Euro, on the other hand, continued to edge higher against many majors on Friday as Eurozone sentiment remained solid. The shared currency was weaker on Monday however, as a lack of recent data and anticipation for this week’s key prints left the Euro limp. Tuesday will see the publication of preliminary Eurozone PMIs for August, which could boost the Euro higher if they continue to be sturdy following July’s smaller-than-expected declines.
Canadian Dollar (CAD) – Friday’s key Canadian data weighed heavily on the appeal of the Canadian Dollar, with markets mixed on the currency as oil prices continued to improve thanks to bets of an oil production freeze.
As oil is Canada’s most lucrative commodity export, news that the substance is selling for high prices often leads to an increase in Canadian Dollar investment, and oil prices rallied to above US$50 per barrel last week.
However, Canada’s Consumer Price Index (CPI) figures for July came in below expectations last Friday. Monthly consumer prices contracted from 0.2% to -0.2%, while the yearly figure fell from 1.5% to 1.3%, a bigger-than-expected drop. Retail sales worsened from 0.2% to -0.1% month-on-month.
This, as well as an increase in demand for the US Dollar, weighed on the ‘Loonie’ on Monday. Oil prices also fell from their best levels as investors readjusted their positions on last week’s over-optimistic rally.
Learn more about the Australian Dollar – Contact TorFX: Get A Quote
Click here for expert help with travel visas: Travel Visas to Australia
Want to live and work Down Under? Click here for expert help: Skilled Migration to Australia
Want to get a job Down Under? Click here for expert help: How to Get a Job in Australia
Click here for tourist information about Australia: Visit Australia
