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    Thread: The Pound vs Australian dollar


    1. #241

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      Monthly review of the Australian dollar is below - thanks.

      As September dawned the Australian dollar was still suffering a hangover from events in China the month before. As a large consumer of Australian exports, the recent saga of negative economic forecasts emanating from Beijing has put significant downward pressure on the Aussie. The Reserve Bank of Australia’s (RBA) attempted cure for this economic headache was to be proactive in weakening the value of its currency to make exports more competitive.

      Mixed fortunes followed the RBA’s actions. Positive export data for August was backed up by a relatively data-light start to September. In such circumstances, few political events are under scrutiny, so normal market forces take effect. As the Australian dollar is currently so cheap, the incentive was to buy rather than to sell, resulting in gains against most major currencies – recoveries were noted for AUD/USD, AUD/JPY and AUD/NZD.

      Ultimately, however, the Aussie slipped to a fresh six year low against the US dollar, twice dipping below 70 cents, due to weak Chinese economic data and the potential for a hike in US interest rates later in the month. And with a potential property market crash in Australia on the horizon, many observers were predicting that things would continue to get worse before they improve.
      In contrast, positive economic rhetoric from the Deputy Governor of the RBA, Philip Lowe, in which he claimed the recent ‘flexibility’ of the Australian dollar – following their attempts to lower its value – was pivotal in the upturn of the Australian economy in the wake of a slowing China, caused the Aussie to strengthen upon returning confidence. Upbeat tones that were echoed by his boss, Glenn Stevens a few days later, with the intention of giving off an air of confidence following the recent downturn in Chinas economy.

      More negative data from the world’s second largest economy, this time concerning the falling price of raw and primary materials in Chinese industry – Australian exports are dependent on higher prices in these areas – was tempered by the news that unemployment Down Under had dropped to 6.2% and 17,000 jobs were added to the economy last month, when a mere 5,000 were expected.
      Having won a landslide election in 2013, Tony Abbott was ousted from power in a party room coup by long-time rival and former investment banker Malcolm Turnbull, who became the new leader of the Liberal Party and Australia’s 29th Prime Minister in the process. Turnbull promised to focus on improving the country’s faltering economy, after Abbott was deposed following months of opinion polls showed his popularity with the public was at an all-time low. The result was therefore seen as a victory for political stability within the ruling party, which subsequently precipitated sanguine sentiment towards the prospect of economic stability for the nation. Consequently, the Aussie received a much needed boost in confidence, before hitting a two-week high.

      More good news followed for the Australian dollar when the US Federal Reserve announced its decision to keep its interest rate unchanged. Only for a Fed official to announce, just a few days later, that a rate rise is still on the cards and he expects a hike by the end of the year. Triggering fears of a sell off for riskier commodity based currencies – a category which the Aussie firmly falls within. This claim was given further credence when Janet Yellen the head of Americas central bank, gave guarantees of an interest rate hike in the US before Christmas.

      Despite the recent strength of the Australian dollar, the slowing Chinese economic growth profile does not bode well for its fortunes. This predicament faced by the world’s second largest economy may give rise to continued commodity price declines and significant Chinese yen depreciation, which could prove particularly negative for the Aussie.

      Is an interest rate drop on the cards? With the risk of house price inflation a concern, the RBA’s next interest rate decision in the second week of October will be watched very closely.
      Last edited by snifter; 05-10-2015 at 10:28 AM. Reason: fixed typo

    2. #242

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      The Australian dollar continues to do well - the last 7-10 days have seen it strengthen against the pound. Weakness in the US dollar has helped the Aussie make gains.

      Quite a change from previous weeks/months for the GBP/AUD rate - once again illustrates how the exchange rate can change considerably in a short space of time.

    3. #243

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      The latest currency review is below.

      Investors became steadily less nervous last week. They moved out of safe-haven currencies, notably the Japanese yen, and into shares and commodity-related currencies. That mood began to develop last Friday, when weaker-than-expected US employment data cast further doubt on an early interest rate hike by the Federal Reserve, and intensified as oil prices went up by 10%. Confidence improved further when the minutes of the Fed policy meeting showed no urgency to increase rates.

      The Aussie was the biggest major-currency beneficiary of the "risk-on" attitude, strengthening by four and a quarter cents against sterling and by two and a half US cents.

      It received a particular advantage from the Reserve Bank of Australia's announced that the Cash Rate would remain at 2%. Investors had half-expected the RBA statement to hint at the possibility of further rate cuts in the future. No such hint was to be found and the Aussie dollar strengthened as a result.

    4. #244

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      The weekly currency review is below, thanks.

      In a break with the usual pattern there was no cohesion between the commodity-related currencies. The NZ dollar put in the strongest performance of the week, the Canadian dollar was unchanged against sterling and the Australian dollar was down by a cent and a third. It was unchanged against the US dollar.

      China was largely responsible for the Aussie's troubles. Tuesday's balance of trade data were quite horrid, with imports falling for a tenth consecutive month. In the year to September they were down by a thumping -17.7%. Whilst Canada and New Zealand also export to China, Australia's exposure to falling demand and falling prices is far greater.

    5. #245

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      The Australian dollar is weaker today due to inflation data released in Australia.

    6. #246

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      The monthly Australia dollar review is below – thanks

      The Australian dollar began October on the front foot against most major currencies. Better than expected Chinese manufacturing data may have been papering over the cracks of much deeper problems in the world’s second largest economy, but was welcomed by the commodity based Aussie in the short-term.

      Strength was achieved against its US counterpart following the release of lower than expected US job figures. The unexpectedly poor data weakened the greenback’s technical tone, as questions about the underlying strength of the world’s largest economy cast further doubt on an early interest rate hike by the Federal Reserve.

      Further gains resulted from interest rate expectations. Spiralling house prices and a more positive economic tone form Glenn Stevens, the Governor of the Reserve Bank of Australia (RBA), combined to instil a general consensus that interest rates would be kept on hold. The RBA didn’t disappoint, leaving the Cash Rate at 2%.

      It wouldn’t be an Australian dollar monthly update without what is fast becoming the obligatory negative Chinese data release that reaffirms their economic slowdown, and causes any confidence in the Aussie to dissipate. Lurking round the corner in October was incredibly poor import data, which was compounded by very low inflation data. The ecostats from Australia itself did little to help either. Whilst the 6.3% unemployment rate was a touch better than expected, the loss of 14k full-time jobs and the -5k fall in overall employment were not.

      Money doesn’t grow on trees. Perhaps not, but quantitative easing might be the next best thing. Mario Draghi, the European Central Bank president, hinted that they may look at extending the money-printing programme in December to stimulate economic recovery in the eurozone. Such measures have previously signalled euro weakness and a strengthening of the riskier commodity based currencies, including the Australian dollar. Just the prospect of more free money was enough for the Aussie to add a swift two cents.
      Would the announcement by the People's Bank of China that they will be cutting interest rates have a positive or negative impact on Australian exports and ultimately the Aussie? Opinions were mixed, but a more clear-cut impact could be foreseen when the Federal

      Reserve issued a policy statement which included the strongest possible hint yet that US interest rates would be increased in December. News of a potential rate hike, coupled with an unanticipated slowdown in inflation Down Under, caused the Australian dollar to lose one and a half US cents and fall by three and a quarter cents against sterling.

      With the Australian property market still very high and not showing any sign of stopping, the RBA has been less inclined to change monetary policy. Consequently market expectation is for them to keep rates at the same level at their November meeting. That’s not to say the need to combat falling inflation or a further slowdown in China’s growth – or a combination of both – couldn’t force their hand. Despite the potential for a rate hike Down Under, it looks increasingly likely that the US will become the first major western economy to take such action since the 2007/2008 financial crisis. Time will tell!

    7. #247

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      The weekly Australian dollar review is below – have a good weekend all.

      Had it not been for the governor of the Bank of England's comments on Thursday the Aussie would have added half a cent on the week against sterling. As it was, Mark Carney said there was no certainty of higher UK interest rates next year, let alone this. His observation worsened the pound's defeat, leaving it with a net loss of nearly three cents.

      The Australian dollar made ground against the American one as well, picking up half a US cent. It did so despite the Federal Reserve chairperson telling Congress that there is still a sporting chance that US interest rates will head higher next month.

      The Aussie's trump card was the Reserve Bank of Australia. When it kept its benchmark Cash Rate steady at 2% the statement spoke of improved economic prospects, lessening the chance of an eventual rate cut.

    8. #248

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      The Australian dollar weekly review is below – have a good weekend everyone.

      Among the major currencies the winners were the US dollar and the British pound, with the Australian dollar not far behind. The Canadian dollar was among the back-markers, alongside the NZ dollar and the euro. The specific link between the three leaders was strong national employment data.

      Last Friday's US figures, which showed the number of people on nonfarm payrolls increasing by far more than expected, sent the Aussie (and the Kiwi) sharply lower, the logic being that more jobs mean more chance of a rate increase next month.

      The Aussie got its own back on Thursday, when figures showing Australian unemployment falling to 5.9% with the addition of 58.6k new jobs sent it sharply higher.

      That still left the Australian dollar a third of a cent lower on the week against sterling and down by a dozen ticks against the US dollar. However, the damage was far less than that done to the other Commonwealth dollars.

    9. #249

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      The GBP/AUD exchange rate dived by about -1.2% yesterday afternoon. Positive comments from RBA Governor Glen Stevens, static US Dollar movement and comments from the BoE caused the Australian Dollar to strengthen against the pound.

    10. #250

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      The Australian dollar didn’t have a good day on Monday. It fell by -1.1% against sterling and by -1.4% against the US dollar.

      The Aussie's position was worsened this morning by news that imports by China, Australia's biggest export customer, fell by -8.7% in November, marking a thirteenth month of decline. The day's second-biggest loss went to the Norwegian krone, on account of its exposure to oil, while the Canadian and NZ dollars got off relatively lightly, losing just -0.5%.

     

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