Local: Thu
Sydney: Thu
Select Destination
Location Time Temp
Sydney Thu21°
Melbourne Thu14°
Brisbane Thu22°
Perth Thu20°
Adelaide Thu
Hobart Thu15°
Canberra Thu16°
Darwin Thu29°

news

Get our help FREE advice or find service providers with our bookJobs Now

Australian Dollar ‘bounce’ on growth data

27 July 2016 by News Desk

Australian Dollar experienced mixed movement since Tuesday’s session, dropping as investors surged into a brief risk-on movement.

Australian DollarAustralian Dollar exchange rates then edged back up as investors sold the Aussie ahead of Wednesday’s key Australian inflation figures, according to currency specialists TorFX

Q2 Consumer Price Index scores for Australia were previously cited as the biggest potential indication for whether or not the Reserve Bank of Australia will cut the Australian interest rate in next week’s meeting.

Quarterly inflation improved from -0.2% to 0.4% as expected, but the yearly score slipped further-than-expected from 1.3% to 1.0%. As a result, the Australian Dollar has fluctuated since the report was released.

New Zealand Dollar (NZD) – The Pound to New Zealand Dollar exchange rate lost around a cent during Tuesday’s session, as an increase in risk-sentiment pushed the ‘Kiwi’ higher. Low Fed rate hike bets as well as Bank of Japan (BoJ) stimulus bets left riskier currencies more appealing, and investors took this as an opportunity to buy up the New Zealand Dollar from its recent lows.

A considerable 47% increase in sales of the Kiwi fruit helped improve the New Zealand trade surplus to NZ$127, which also assisted in the ‘Kiwi’s advance.

Australian Dollar exchange movements

Pound Sterling (GBP) – The Pound’s movement was mixed yesterday, but the currency generally trended towards the downside due to disappointing comments from Bank of England policymaker Martin Weale.

Last week, Weale bolstered Pound sentiment, saying that he saw little reason to cut the key UK interest rate until poor post-Brexit ecostats were released. But after last Friday’s PMI figures Weale indicated there was now good reason to press ahead with stimulus measures.

With just over a week to go until the BoE’s August policy decision meeting, investors are now pricing in bets that the bank will opt to cut the key UK interest rate to a new record low. Other easing measures are also expected by many analysts, and markets are likely to continue speculating what sort of stimulus package could be delivered.

The bank’s decision may also be influenced by today’s preliminary UK Gross Domestic Product (GDP) report. This report details growth in Britain throughout Q2, and was forecast to have improved from 0.4% to 0.5% quarter-on-quarter.

The score came in above expectations, at 0.6% and is likely to have boosted hopes that the UK economy can remain resilient despite disappointing July news. However, the figure may frustrate investors who had expected the UK to continue growing if the nation had voted ‘Remain’. As a result, Sterling saw little change from the result on Wednesday morning.

US Dollar (USD) – The Pound to US Dollar exchange rate was mixed during Tuesday’s session, as sentiment was mixed for both Britain and the US. Investors attempted to keep Sterling at its current levels, despite comments from BoE officials pushing it down.

US PMIs were mixed following Friday’s optimistic Manufacturing print. Services were expected to improve from 51.4 to 52.0, but instead dropped to 50.9. This was caused by a slowing in business activity and lower price pressures. On the other hand, the US Composite PMI was still able to climb despite this, reaching 51.5 from 51.2. Lastly, US consumer confidence came in well above expectations.

While last month’s figure was revised down from 98.0 to 97.4, July consumer confidence merely slipped to 97.3 despite being expected to drop to 96. New home sales were also impressively high, hitting their highest levels in over eight years.
All the recent US data points to a US economy that is ready for an interest rate hike.

Global headwinds weigh on the Federal Reserve’s rate decision and leave it in a difficult position. The Fed is meeting during Wednesday’s US session for its July policy meeting, but analysts predict an extremely low 2.4% chance of a rate hike this month. The US Dollar could rally if the Fed adopts a hawkish tone and downplays the effects of the Brexit on the US economy.

Australian Dollar exchange movements

Euro (EUR) – The Euro remained sturdy throughout Tuesday’s session, with investors now increasingly confident that the Eurozone had remained resilient despite worries of Brexit damage since June. As a result, the Pound to Euro exchange rate was unable to maintain its daily highs for long.

Amid a lack of key ecostats throughout the day, markets instead took the time to note that Tuesday the 26th marked the four year anniversary since European Central Bank (ECB) President Mario Draghi had first pledged to do ‘whatever it takes’ to save the Euro.

While the oft-repeated phrase has become somewhat famous in markets, some analysts indeed believe that his words (and of course the stimulus packages that followed) actually did save the Euro. Since Draghi first revealed his intention to save the currency, the Euro has begun to steady despite ongoing difficulties in multiple Eurozone nations.

Canadian Dollar (CAD) – The Canadian Dollar continued to have difficulty holding its ground during Tuesday’s session after oil plunged by around 2% on Monday night. Oil futures have since closed below US$43, its lowest level since April. This has heavily weighed on hopes that prices of Canada’s most lucrative commodity were recovering.

Oil demand has been dropping, and supply for the commodity remains well in excess. US petrol stocks are almost 15% above last year’s levels. All this pressure preventing oil prices from recovering have left the Canadian Dollar limp. As oil prices are no longer expected to recover any time soon, the ‘Loonie’ will have to look elsewhere for inspiration.

Want to know more about the Australian Dollar – Contact TorFX: Get A Quote

Click here for expert help with travel visas: Travel Visas 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



We use cookies on Thinking Australia

This website uses cookies to ensure you get the best experience on our website. Please confirm permission to use cookies.
Cookie Policy Privacy policy