Australian Dollar surges after ore price rise

25 November 2016 by News Desk   |   SHARE  

Australian Dollar value increased as prices of iron ore, Australia’s most lucrative commodity, have soared 10% in the last week alone.

Australian Dollar rise is value has been due to various factors such as Chinese speculators and stronger prices in steel and coking coal, according to currency specialists TorFX

The Australian Dollar has struggled to benefit from the news all week due to the lasting bullishness of the US Dollar, but as USD demand softened on Thanksgiving Thursday the Australian Dollar finally surged and pushed GBP/AUD down to weekly lows.

New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate briefly traded at its best levels in around seven weeks on Thursday before slipping during Friday’s Asian session and finally plunging when European markets opened due to a rush in demand for risk-correlated currencies.

Close correlation to the Australian Dollar helped the ‘Kiwi’ advance against the Pound on Friday as both currencies benefitted from solid commodity prices and a limper US Dollar.

Australian Dollar surges after ore price rise

Pound Sterling (GBP) – The Pound trended relatively flatly against most major currency rivals throughout Thursday trade and was largely able to hold its recent gains.

This was mostly due to leftover bullishness following Wednesday’s UK Autumn Statement, during which Chancellor Philip Hammond announced that (despite a huge £122b black hole in UK public finances) £23b would still be spent on infrastructure and innovation over the next half decade to keep the UK economy afloat while the nation undergoes the Brexit process.
After holding its ground for most of the week, Sterling slumped on Friday morning and failed to recover losses after the publication of a solid growth report for the UK.

US Dollar (USD) – The Pound to US Dollar exchange rate edged higher as the Pound continued to hold steady on an Autumn Statement-related surged while the US Dollar saw limp trade as US markets closed to observe the Thanksgiving holiday.

Underlying US Dollar trade remained sturdy, making it likely that the US Dollar will be able to advance if the day’s US data impresses. The Federal Reserve’s December meeting is now under three weeks away and bets that it will hike the US interest rate remain above 90%.

Euro (EUR) – The Pound to Euro exchange rate was largely able to hold its best levels in over two months throughout Thursday’s session.

Demand for the Euro was underwhelming despite the day’s Eurozone ecostats generally meeting expectations. Germany’s final Q3 Gross Domestic Product (GDP) results came in at 1.7% year-on-year and 0.2% quarter-on-quarter, as expected. While the 0.2% quarterly growth was the slowest period of growth for the year so far, this (as well as the IFO’s business sentiment results for November) indicated that Germany’s economy remained resilient despite global economic risks.

GfK’s December German consumer confidence survey also beat expectations, rising from 9.7 to 9.8. Despite the slew of solid datasets, the Euro remained weak due to underlying factors like concerns that the European Central Bank (ECB) would be extending its easing measures in its upcoming December meeting.

GBP/EUR fell on Friday morning however as traders softened on the Pound ahead of the weekend.

Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate slipped slightly as the end of the week approached, but was able to remain relatively close to these highs due to weakness in the Canadian Dollar limiting Sterling’s Friday falls.

Thursday saw GBP/CAD easily hold its weekly highs due to weakening demand for the Canadian Dollar. With OPEC’s next meeting under a week away, doubts of a comprehensive oil output cap plan have concerned traders and weakened the oil-correlated ‘Loonie’.

However, excitement is bound to kick up again as OPEC’s meeting nears, which could see GBP/CAD fall in the early days of next week.

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

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