Australian Dollar surges ahead
27 September 2016 by News DeskAustralian Dollar: Sterling attempted to recover on Monday night as a GBP selloff cooled and risk-markets became jittery ahead of the US Presidential debate.
Australian Dollar surged ahead on Tuesday morning as markets priced in a debate-win for Democrat nominee Hillary Clinton, according to currency specialists TorFX
Her opponent, Donald Trump, has expressed intentions that the markets believe would be highly negative for the US economy, if not global growth. Therefore Clinton’s strength has allowed investors to feel safer buying into risky assets.
The Australian Dollar was also boosted by news that Roy Morgan’s Australian consumer confidence index had jumped by 4.4% to 120.6 in the last week.
New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate dropped by over a cent during Monday’s session as the ‘Kiwi’ Dollar continued to recover from last week’s selloff despite Monday’s underwhelming New Zealand ecostats.
NZD was given another solid boost on Tuesday for similar reasons to the Australian Dollar as markets began to indulge in more risk-correlated investments.
As a result, GBP NZD headed closer towards the all-time-lows the pair hit last week – and could easily break new all-time-lows again in the coming weeks if risk-sentiment continues to strengthen.
Australian Dollar surges ahead
Pound Sterling (GBP) – Sterling lost value on Monday for the same reasons it lost value last Friday, as investors continued to grow concerned that Britain’s government would head for a ‘Hard Brexit’ and give up on access to the European Union’s single market.
This concern was worsened on Monday by comments from Scotland’s external affairs minister, Fiona Hyslop, who believed a ‘hard Brexit’ was becoming increasingly likely after talks with UK ministers.
Britain’s financial sector was given a little boost of confidence as public funds began to reopen, and the Z/Yen Global Financial Centres Index (GFCI) indicated that London remained number one in financial indicators in 2016. This data was collected largely before the EU Referendum, but saw London beating other giants such as New York, Singapore and Hong Kong.
Sterling began to hold its ground a little more sturdily on Tuesday, but plunged against risk-correlated currencies.
US Dollar (USD) – The Pound to US Dollar exchange rate slipped and trended near its five-week-lows during Monday’s session due to weakness in Sterling, but the pair had recovered slightly by Tuesday morning as investors grew jittery on the US Dollar.
The night of America’s Monday session saw US Presidential hopefuls Hillary Clinton and Donald Trump clash in their first TV debate, which grabbed the attention of citizens and markets across America. The US Dollar weakened as the uncertainty over the future of the world’s biggest economy came into focus, and continued to trend weakly on Tuesday as investors began to seek out riskier currencies instead of the ‘safe-haven’ US Dollar.
Some analysts believe that Clinton’s strong performance stoked risk-appetite, causing investors to seek out higher yields from risky currencies during a sturdy period in the markets.
Euro (EUR) – The Pound to Euro exchange rate lost around a third of a cent in value during Monday’s session and extended its post-Referendum lows, hitting its worst levels since August 2013. By Tuesday morning, the pair had recovered a little closer to the week’s opening levels but still remained near 2016’s lows as Brexit concerns weakened Sterling.
The Euro, on the other hand, was given a decent boost by the day’s German September business sentiment report from IFO. IFO’s business climate print improved from 106.2 to 109.5, the current assessment score rose from 112.8 to 114.7, and expectations gained from 100.1 to 104.5.
However, later in the session GBP EUR was able to recover slightly as European Central Bank President Mario Draghi hinted that the bank would continue to do what it could to help stimulate growth. While this was anything besides a confirmation, some investors believed that it indicated more easing could be on the way in the future.
Canadian Dollar (CAD) – The Pound was able to advance by around half a cent against the Canadian Dollar during Monday’s trade session as global markets became jittery on risk ahead of the US Presidential debate.
This was despite an increase in oil prices as this week’s meeting of oil-producing nations approached. The oil-correlated Canadian Dollar typically advances on stronger oil, and oil prices improved by 2.5% on Monday as markets hoped for a producer agreement to stimulate prices.
Following Monday night’s US Presidential debate, the Canadian Dollar was able to regain a lot of the day’s lost ground vs. the Pound as risky assets became more appealing to investors, but a fresh dip in oil prices and oil producer meeting jitters prevented the ‘Loonie’ from surging too far.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.
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