AUD and NZD Softened after USD Lifted by Non-Farm Payrolls
The headline US Non-Farm Payrolls figure may not have printed positively (coming in almost 40,000 below forecast), but US unemployment has fallen to an 8-year low and wages have risen significantly. As a result, the ‘Greenback’ is bullish, weakening the ‘Aussie’ and the ‘Kiwi’.
Earlier…
Pound Sterling (GBP) is being weakened by multiple factors today, including unwelcome developments for Chancellor George Osborne. Meanwhile, the Australian Dollar (AUD) and New Zealand Dollar (NZD) are weakened by the approaching US Non-Farm Payrolls data, although they have managed to trend positively against the Pound.
Pressure on George Osborne Weakens Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate
George Osborne is feeling the heat from two directions today after more details of Google’s £130 million ‘sweetheart’ deal with HMRC and warnings that the Department of Health may need emergency funds emerged. According to filings by the UK subsidiary of Google, £33 million – one quarter – of the total amount repaid to the UK government in the latest deal related to share options handed out to staff. The news that the government has secured less-than £100 million in actual corporation tax payments has generated further anger.
In additional bad news for the Chancellor, his plans to cut borrowing to target levels this year could be in jeopardy after it was revealed that the Department of Health may have overspent its £116.3 billion budget. Despite having had its budget increased this financial year by £3.1 billion, Jeremey Hunt’s department could have to request additional funds from the Treasury. Doing so could seriously hamper Osborne’s plans to cut borrowing, with the Chancellor already needing to find a £5.3 billion surplus in order to keep the deficit at £68.9 billion as planned.
The Australian Dollar is weak today ahead of the key release of US Non-Farm Payrolls, despite the publication of a fairly-optimistic Statement on Monetary Policy by the Reserve Bank of Australia (RBA). Although it notes the worsening global conditions and softer outlook on growth, the RBA still predicts that:
‘Low interest rates and ongoing growth in employment are expected to lead to a further pickup in household incomes and demand. Forecasts for growth in household income have been revised up in line with a slightly stronger forecast of employment in the near term. Meanwhile, consumption growth is projected to increase to be a little above its longer-term average over the forecast period, consistent with the forecasts in the November Statement’
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Weak on Increasing Support for ‘Brexit’
Pound Sterling has further been weakened by rising sentiment for a ‘Brexit’ and news of infighting among anti-EU campaigners, increasing uncertainty again after David Cameron’s securing of a deal with European Commission President Donald Tusk had calmed fears slightly. A new poll shows that the number of people intending to vote for Britain to leave the EU has risen to 45%, up 3% in just a few days.
The New Zealand Dollar has managed to remain strong against the Pound, despite being weakened by the approaching US Non-Farm Payrolls. The key US employment data is one of the strongest indicators of US economic health and so will be a large contributor to the Federal Reserve’s future interest rate decisions.
Current GBP, AUD, NZD
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 2.0202, while the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is trading around 0.4949.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trading around 2.1626, with the New Zealand Dollar to Pound Sterling (NZD/GBP) exchange rate trending in the region of 0.4623.
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