The Pound vs Australian dollar

[John from Moneycorp]

The pound still remains strong against the Australian dollar - lot of negativity around the dollar at the moment.

[John from Moneycorp]

Weekly currency review is below, thanks.

 

An upward turn in the Australian dollar's fortunes saw it become the top performer among the major currencies, strengthening by two thirds of a US cent and rising by three cents against sterling. It received some help from the economic data, which showed a strong 38.5k increase in employment and a decent improvement in retail sales. Of greatest help, though, was the Reserve Bank of Australia. Tuesday's RBA rate statement included nine of the usual bluster about the currency being overvalued and Friday's monetary policy statement appeared to rule out any chance of further rate cuts.

 

Sterling looked alright until Thursday, when evidence emerged that the Bank of England is less eager for higher interest rates than previously thought.

 

The apparent postponement of a UK rate increase from "around the turn of the year" to sometime in 2016 cost the pound two and a half cents.

[John from Moneycorp]

Fairly quiet week ahead data wise - RBA minutes released could be interesting in terms of any comments regarding interest rates in Australia.

[John from Moneycorp]

The pound is stronger today following inflation data released today from the UK.

 

The UK's inflation rate turned positive in July - the Consumer Prices Index measure was 0.1% (from June's 0%).

[John from Moneycorp]

As we come to the end of the week, the Australian dollar is once again weaker – the dollar reacted to poor economic news released from China.

 

As I’ve mentioned a few times on this thread, China is a major trading partner for Australia. Therefore, any news released from China can have an impact on the Aussie dollar.

 

Thanks

 

John

[John from Moneycorp]

Weekly review below, have a good weekend all.

 

Overall, it was a fairly light week for Australian economic statistics.

 

The Aussie was untroubled by a -1.3% monthly fall in motor vehicle sales or by the Melbourne Institute's leading index, which at 0% pointed to flat growth. It actually received some help from the Reserve Bank of Australia when the RBA published the minutes of its policy meeting. For a second week the bank held back from its traditional tirade about the Aussie's overvaluation.

 

However, the Australian dollar's performance was driven mainly by the hopes and fears of investors about slowing growth in China, an exodus from emerging market currencies and continued downward pressure on commodity, energy and equity prices. And there were more fears than hopes. The Aussie lost two thirds of a US cent and fell by two and three quarter cents against sterling.

[John from Moneycorp]

Australian dollar is much weaker today due to worries over global markets and China's economic growth prospects. Good for those sending money to Oz!

[John from Moneycorp]

Less panic in the market has led to a stronger Australian dollar over the past few hours.

[John from Moneycorp]

The weekly currency review is below, have a good weekend all - thanks.

 

The commodity currencies are ending the week in recovery mode having been driven lower in the immediate aftermath of the Chinese equity collapse on Monday.

 

The Australian dollar will continue to trade with great emphasis on how China’s economic outlook projects. The fall was halted just shy of the psychological level of A$0.7000 represnting yet another new 6 year low.

 

In light of the weakening trade prospects between Australian and China, the pressure for the Reserve Bank of Australia to deliver further interest rate cuts form the current 2.0% rate will mount.

[John from Moneycorp]

Poor data out of Australia has weakened the Aussie dollar. The release of Gross Domestic Product (GDP) numbers were not great for the Aussie.

 

Concerns over the economy in China also continue to weigh heavily on the dollar.

[John from Moneycorp]

The monthly Australia dollar review is below - thanks

 

The first few days of August saw the Aussie dollar dip in anticipation of the outcome of the Reserve Bank of Australia’s monetary policy announcement, with investor focusing on their interest rate decision. But as news filtered through that – as expected – the base level interest rate would remain at 2% the Australian dollar rallied, becoming the top performer amongst the major currencies. This upturn in fortunes received further support when positive economic data revealed a strong increase in employment and unseasonably high retail sales.

 

Next it was the Bank of England’s turn to reveal its hand, but unlike their antipodean counterparts who were true to form, their decision to postpone an interest rate rise in the UK until sometime at the back end of 2016 was somewhat more unexpected – causing the pound to fall in value against the Aussie.

 

With surprise decisions from central banks fast becoming flavour of the month, China – Australia’s largest trading partner – announced plans to devalue its currency by almost 2%, in an attempt to make the country's exports more competitive and prop up the economy after recent poor data indicated slowing economic growth. The Australian dollar tumbled to its lowest level since 2009 in the immediate aftermath of the Peoples Bank of Chinas announcement, before making a strong recovery after the yuan’s value was moved down for a third day in a row. It suffered one US cent falls on both of the previous days China devalued its currency, but shook off the latest action.

 

Although initially this move weakened the Aussie, overtime it could prosper from it, as a weaker yuan has the potential to boost Australia’s exports – nearly all Australian iron ore heads towards China – which as a commodity-based economy make up a large proportion of Australian GDP.

Having been weighed down by falls in Asian and European stocks and base metals prices, further interest rate speculation – this time from the US – saw the Aussie bounce back. Not for the first time in August it appeared the anticipated course of action from a central bank would not materialise, after the minutes from the US Federal Reserve July policy meeting showed there were doubts about a September rate hike. Doubts that were further strengthened by the economic havoc emanating from China.

 

The 24^th of August was dubbed ‘Black Monday’ after more negative data emerged from China, resulting in a rout in world markets. With Australia so heavily reliant on what happens in China, the news from Beijing that manufacturing activity had contracted at the fastest rate in six-and-a-half years in August triggered a second six-year low for the Aussie in less than two weeks – largely fuelled by global commodity prices falling to their lowest level in 16 years.

 

A turbulent month for the Aussie saw it down 1.6% against sterling, 4% against the US dollar and 5% against the euro, having lost 12% against the single currency at one point as measures in China took hold. The weakening of the Aussie may have been short-lived in the wake of far-east devaluation measures, but the Australian economy is still not at full-strength and extremely dependent on China, which may result in a longer term rate cut down under as we move into the end of Q3.

[John from Moneycorp]

The Australian dollar is slightly stronger today – this is down to optimism over China and measures which could take place to help their economy.

[John from Moneycorp]

Good week so far for the Australian dollar – big shift in the rate over the past few days making the dollar much stronger against the pound.

[John from Moneycorp]

The Australian dollar is weaker today against the pound.

 

Poor economic data from China was a factor behind the Aussie being weaker.

[John from Moneycorp]

The Australian dollar is stronger against the pound today. This was due to positive economic data coming out of China.

 

China's official purchasing managers index was released – the figure was an improvement on the previous month which helped the boost the Aussie dollar.

[John from Moneycorp]

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 29^th 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.

Edited October 5, 2015 by snifter
fixed typo

[John from Moneycorp]

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.

[John from Moneycorp]

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.

[John from Moneycorp]

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.

[John from Moneycorp]

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

[John from Moneycorp]

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!

[John from Moneycorp]

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.

[John from Moneycorp]

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.

[John from Moneycorp]

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.

[John from Moneycorp]

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%.