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    Thread: The Pound vs Australian dollar


    1. #171

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      Hi all the latest Australian dollar update is below, thanks

      None of the commodity-oriented currencies had a great week. Investors shied away from them because of nervousness about the China and other emerging market economic performance. The Aussie took more of a hit than the Canadian dollar but fared far better than the NZ dollar. It lost two and a half cents to the US dollar and three and a half to sterling.

      It received no help whatsoever from the Australian economic data. The only figure released during the week was the Conference Board's leading indicator. It was slightly more positive, rising from 0.2% to 0.5%, but failed to impress investors.

      The Reserve Bank of Australia managed to get through a complete speech without mentioning the "overvalued" Australian dollar. That might have been positive for the Aussie had it not been for New Zealand's prime minister and central banker carping about "unjustified" and "unsustainable" strength of their own currency.

    2. #172

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      Please find a monthly review below of the Australian dollar.

      A month ago the Reserve Bank of Australia was carping about its "overvalued" currency, as it had been doing for months. Even though the Aussie had weakened from its record highs by 15% against the US dollar and by 10% against the pound, the RBA thought it was still too strong for the good of the Australian economy. A month ago investors disagreed. In September they fell in with the RBA's argument.

      After spiking higher early in the month the Aussie was given a downward push by investors when they saw the Australian employment figures for August. On the face of it the 121k increase in jobs was good news, as was the fall in unemployment from 6.4% to 6.1%. But the vast majority of those new employees were part-timers, not at all what the doctor ordered. They were far from the worst employment data that investors had ever seen but they were a handy excuse to take profits on long-Aussie positions. Investors began to bail out, selling off the dollars they had previously bought.

      The Aussie's rout took on a life of its own, as these sharp moves can often do. The falling currency encouraged more sellers, which caused a further decline, which brought in more sellers. Selling a currency because it is going down (or buying one because it is rising) is not always a silly idea.

      The bottom line was monthly losses for the Australian dollar of almost 5% against sterling and nearly 6% against the US dollar. Compared with its position at the beginning of the year the Aussie is still 3% stronger against the US dollar but it is down by two and a half cents or -1.4% against the British pound. Its only appreciable gain since 1 January is the 5.7% by which it has strengthened against the troubled euro.

      Despite Australia's 2.5% benchmark interest rate (Britain 0.5%, America 0.125%, Euroland 0.05%, Japan 0.02%) investors are no longer convinced that the Australian dollar represents good value for money. Economic growth there has slowed, corporate activity is slowing, the prices paid for the country's coal and mineral exports are falling. More importantly, the economy of China - Australia's biggest customer - is losing speed. That means lower demand for cheaper Australian exports and reduced commercial demand for the Australian dollar.

      If fewer customers are buying fewer Aussie dollars the Aussie is likely to fall further. That is not a given: other factors are in play which could continue to support it, not least the relatively high interest rate and Australia's AAA credit rating. But a further decline is likely, now that investors have been reminded it can go down as well as up.

    3. #173

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      The Australian dollar remains relatively strong against the pound.

      Consumer Prices Index (CPI) data released from the UK yesterday also had a slight impact – this led to the view that any interest rate rise in the UK might be a while off.

    4. #174

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      Weekly currency review is below.

      Renewed uncertainty and nervousness about the global economic outlook made for a volatile and unpredictable week in financial markets.

      The usual loose bond between the commodity-related currencies evaporated and the antipodean dollars headed in opposite directions. The Aussie headed south with sterling, remaining roughly unchanged against the pound.

      It lost a third of a US cent and fell by a cent and a half against the euro. The few Australian ecostats had minimal impact.


    5. #175

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      After the previous week's agitation a return to normality in financial markets tended to help the commodity-related currencies.

      News that China's economy expanded at an annual pace of 7.5% in the third quarter also helped because it meant faster-than-expected growth for Australia's biggest customer.
      With Australian inflation exactly on target at 2.3% investors were inclined to favour the Aussie; it was steady against the US dollar and strengthened by three quarters of a cent against sterling.

    6. #176

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      Both the antipodean dollars had a reasonably successful weekdespite a noticeable setback on Wednesday when the US Federal Reserve confirmed that it was halting its money-printing stimulus programme.Yet again it was sentiment, rather than any compelling argument from the domestic economic data, that took them ahead.A greater relaxation about the global outlook made investors better-disposed to commodity-related currencies. The Aussie strengthened by a cent and a half against sterling and the euro.


    7. #177

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      Monthly currency review is below, thanks.

      October was a difficult month in financial markets. For the Australian dollar it meant frequent changes of direction. Their net effect was not huge: the Aussie is unchanged on the month against sterling and down by just two thirds of a cent against the US dollar. But it covered a range of six cents against sterling and its weekly reversals were unnerving to investors.

      The Aussie was not alone in its erratic movements. A series of economic and political events and news made life interesting for just about every currency. Among the majors it was the Japanese yen which delivered the weakest performance while the US dollar led the field. In both of those cases it was central bank money-printing that made the difference: the US Federal Reserve brought its six-year programme of quantitative easing to an end just as the Bank of Japan cranked up the presses.

      The Reserve Bank of Australia was not involved in the debate, at least as far as monetary policy was concerned. It has never needed to go down the money-printing road because Australia largely avoided the nastiness of the global financial crisis and subsequent recession. The RBA's benchmark interest rate has stood at a record low of 2.5% since last summer and, according to the RBA's latest statement, is likely to remain there for another two years.

      However, RBA Governor Glen Stevens is not one to hide his light under a bushel when it comes to opinions about the value of the Australian dollar. And he still thinks it is too strong. Investors have heard the story often enough but every time he reminds them it is too strong there is a flurry of selling.

      Otherwise, investors are once again reluctant to sell the Aussie. They sold it in September, when it lost roughly 5% to sterling and 6% to the US dollar, but last month they were apparently happy to pick up the considerably higher returns which the Australian dollar still offers.

      There was the occasional wobble though. Some had an external cause, such as when the International Monetary Fund downgraded its global economic forecast for the third time this year or when the Chinese economic data came in below expectations. Others had a very domestic origin. The most notable of these in October was when, for a second month, the Australian employment data were wildly adrift from analysts' forecasts. In September there had been a massive increase in employment. The October numbers showed an almost equally huge fall. The Australian Statistics Bureau acknowledged there had been mistakes but could not say where the errors lay.

      So the Australian dollar soldiers on, talked down by its central bank but broadly respected by investors. Although upward progress might be difficult, reports of its demise are clearly exaggerated.

    8. #178

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      The Australian dollar is weaker against the pound.

      This is mainly due to negative economic news coming out of Australia.


      Australia's trade deficit more than doubled in September.

    9. #179

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      All of the commodity-related currencies lost ground over the week and the Aussie suffered more than most. It lost two and a half US cents and was down by three and ahalf cents against sterling.

      China was partly to blame. Purchasing managers' index there showed private sector business activity growing more slowly in October.

      The Australian ecostats were not desperately helpful either. Manufacturing and services sector firms both reported a continuing slowdown in business. Building permits slumped by -11.0% in September. The 1.2% monthly increase in retail sales was a pleasant surprise to investors but the 24k increase in employment did not go down too well, even though it was bigger than the expected 10kincrease.

      After a couple of months of apparently random numbers investors seem to have grown distrustful of the Australian employment data.

    10. #180

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      The antipodean dollars were the week's top performers by quite a margin. The Aussie took second place behind the Kiwi, strengthening by one and a quarter US cents and by four and a half cents against sterling.

      To a large extent it was a matter of the Greenback and the pound falling, rather than the Aussie rising. The US dollar's problem was a smaller-than-expected monthly rise in employment. Sterling's problem was more deep-seated; the Bank of England forecast that UK inflation would fall to 1% and remain down there until late next year. If correct, it would mean a 12-month delay to the first interest rate increase.

      The Australian economic data were decent enough and there were some better than expected figures from China. But it was mainly an interest rate play. Australian rates are higher than those of other major currencies and NZ rates are a lot higher.

     

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