Currency exchange update
18 July 2016 by News DeskCurrency exchange update - Better-than-expected Chinese data improved sentiment towards the Aussie Dollar.
Currency exchange update – As China is one of Australia’s primary trade partners, the industrial production improvement from 6.0% to 6.2% and retail sales improving from 10% to 10.6% bolstered ‘Aussie’ Dollar appeal, according to currency specialists TorFX.
However the Australian Dollar struggled later in the session and on Monday as strong US data strengthened the appeal of the ‘Greenback’.
New Zealand Dollar (NZD) – The highly volatile New Zealand Dollar strengthened on Friday due to optimistic Chinese data improving sentiment for the Asia-Pacific trade region, but began to slip during the US session and on Monday’s session as optimistic US data led to a decrease in risk-sentiment.
Underwhelming Consumer Price Index (CPI) scores also made it difficult for the New Zealand Dollar to be sturdy when markets opened this week.
While the key quarter-on-quarter score for Q2 inflation improved from 0.2% to 0.4%, it missed out on the 0.5% forecast. The yearly score also disappointed by remaining at 0.4% instead of improving to 0.5% as expected.
Currency exchange update
Sterling – slumped across the board on Friday as the currency was deflated from its Thursday highs. Following the Bank of England’s (BoE) surprising decision to freeze interest rates last week, the Pound rallied. However, after May’s poor UK construction data was released on Friday, Brexit jitters worsened as analysts began to predict that the UK’s construction sector would fare even worse from July onwards.
The Pound will likely remain pressured in the coming days and weeks as the BoE’s August meeting is already under three weeks away. Bets are extremely high that the key UK interest rate will be cut, and that the bank will restart its QE bond-buying scheme.
Sterling trended a little more solidly on Monday as investors readjusted their positions on the currency. Markets may also have reacted optimistically towards news that UK tech firm ARM Holdings has been bought out by Japanese company Softbank, as it improved hopes that UK businesses are still appealing post-Brexit. Investors also anticipated comments due in the afternoon from BoE official Martin Weale.
Currency exchange update
US Dollar (USD) – The Pound to US Dollar exchange rate lost around a cent and a half on Friday’s session as Sterling slipped from its weekly highs on dovish comments from BoE member Andy Haldane, while the US Dollar was boosted by solid US data including retail sales and inflation figures.
While the key US Consumer Price Index (CPI) for June was expected to improve to 1.1% from 1.0%, the figure remaining at 1.0% indicated that Brexit jitters may not have affected the US economy too heavily. Retail sales, on the other hand, improved from 0.2% to 0.6%, despite being expected to drop to 0.1%.
The solid figures left some analysts predicting that US growth was between 2.5% and 3.0% in Q2, which would leave the economy in a healthy place. However, bets that the Federal Reserve will hike the key interest rate are still low due to the still largely unknown effects of Brexit jitters on global markets.
Euro (EUR) – The Pound to Euro exchange rate lost about a cent on Friday, but ultimately gained considerably week-on-week and is currently trending near levels not seen since the last week of June. Sterling’s Friday fall is likely due to a mix of profit-taking, as well as news that BoE chief economist Andy Haldane had made statements urging easing policies to be made in August. The typically hawkish member dragged Sterling lower with his dovish comments.
Meanwhile, Eurozone consumer prices rose a small 0.1% in June, indicating that post-Brexit scores may be worse and suggesting that more needed to be done to stimulate the economy across the bloc. While the European Central Bank (ECB) is expected to avoid easing monetary policy in its meeting this week, bets on a new series of easing measures in September are currently on the rise.
Canadian Dollar (CAD) – The Pound to Canadian Dollar exchange rate slipped on Friday and gained slightly on Monday, as was the case with most Sterling pairings.
The Canadian Dollar has been slightly strengthened by an increase in oil prices over the weekend, but markets quickly shrugged this off and Sterling advanced on Monday regardless. A deal between UK company ARM and Japanese company Softbank improved post-Brexit business sentiment.
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