Foreign Currency Market Update – GBP / AUD Update
Over the past month or so the Australian Dollar has seen significant fluctuations in response to ever-changing market sentiment. Geopolitical tensions in Europe have certainly weighed on trader risk-appetite, but much of the changes have been due to US Dollar movement, with mixed US ecostats weighing on Fed rate hike bets In addition to market sentiment causing the Oceanic currency to fluctuate, changes in commodity prices (with particular reference to iron ore) have also provoked Australian Dollar movement. Over the past month, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending within the range of 1.9322 and 2.0062.
From a domestic perspective, ‘Aussie’ (AUD) fluctuations can be attributed to speculation as to whether the Reserve Bank of Australia (RBA) is considering introducing an additional rate cut. Continued complaints about the Australian Dollar’s significant overvaluation have caused many futures traders to speculate about a benchmark rate cut occurring for the third time in 2015. However, a housing bubble in Sydney has thus far been a stumbling block for policymakers who wish for a lower valued ‘Aussie’. Even poor growth figures and relatively rocky ecostats haven’t been enough to provoke RBA intervention thus far.
On Monday 8th, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending within a narrow range. The Pound advanced before the weekend in response to a report which showed Britons expect inflation to rise significantly within the next 12 months but the ‘Aussie’ also gained thanks to better-than-expected Chinese trade surplus. China’s Trade Balance was forecast to rise from $34.13 billion to $44.80 billion, but actually climbed to $59.49 billion. The South Pacific currency’s gains have been somewhat tentative, however, as China’s imports declined more-than-anticipated.
Looking ahead, Thursday’s Australian labour market data will be of most significance over the coming week. May’s Employment Change is forecast to show 15,000 newly employed, whilst May’s Unemployment Rate is expected to remain unchanged at 6.2%. Tuesday’s Home Loans and Investment Lending data publications may also be of interest to those invested in the Oceanic currency. Data out of China will be influential, with Thursday’s Inflation and Industrial Production data most likely to impact.
Heads Up
Summary of major upcoming data releases that we think may move the market.