The Australian Dollar (AUD) was stronger against the Pound (GBP) and hit a two-week high against the US Dollar (USD) on Thursday after the Federal Reserve policy meeting minutes for September painted a more dovish tone than economists had expected.
Policy makers at the US Central Bank were shown to be growing concerned over the health of the global economy and said that they did not want to raise the nation’s interest rate for a considerable time or at least until there are consistent signs that the US economy is improving.
With economic data releases out of the world’s largest economy coming in mixed in recent weeks concerns are building that the global economy is slowing. Worries over the weakness in the Eurozone, geopolitical concerns such as the war against ISIS and the Ebola crisis were also restraining policy makers.
With an interest rate rise less likely to occur anytime soon the world’s commodity and emerging market currencies were able to push higher against the majors. Some policy makers were warning that raising rates soon could create downside shocks to the US economy.
‘The minutes appear less hawkish than anticipated, as there was concern about the health of the Eurozone economy and the potential impact of an appreciating Dollar on both US exports and inflation,’ said Ryan Sweet, an analyst from Moody’s Analytics.
The ‘Aussie’ was able to advance despite the latest domestic jobs report coming in below economist expectations. The data showed that Australia’s unemployment rate increased from 6% to 6.1% in September as the number of people in work fell by 29,7000.
The Pound was softer against the ‘Aussie’ on Thursday as the market awaited the release of the latest Bank of England Interest Rate and Quantitative Easing decisions. Economists are expecting the Bank to leave rates unchanged at the record low level of 0.5% and maintain its monthly bond-buying programme at £375 billion.
Pound Sterling to Australian Dollar Exchange Rate Forecast
With signs that the global economy is slowing it is likely that BoE policy makers will remain in favour of leaving rates unchanged for longer as they fret that an early hike could have a negative impact upon the UK economy.
If that is the case then we could see the Pound make further falls against the ‘Aussie’ in Thursday’s session.
US Dollar to Australian Dollar Exchange Rate Forecast
The strength of the ‘Aussie’ against the US Dollar is likely to be short-lived as traders continue to bet that a US rate rise will occur next year. The latest Jobless Claims data due later in the session is also likely to offer support to the US currency.
The Australian Dollar remains under pressure from falling commodity prices and a slowdown in China.
‘Commodity prices are going to stay low for the foreseeable future and I think once that this little rally is over and done we’re going to see the long term trend continue again. If we look at the Aussie dollar this week, it hasn’t rallied because of anything economic in Australia, it has rallied because the US dollar has pulled back a bit,’ Said Andrew Barnett director at Goldrock LTG.
UPDATE
The Australian Dollar to Pound Sterling exchange rate is currently trending in the region of 0.5438.
The Australian Dollar to US Dollar exchange rate is currently trending in the region of 0.8749.
Friday’s disappointing Australian data has seen the South Pacific currency lose ground against the Pound and the US Dollar.
Home Loans were forecast to tick a little lower from 0.3% to 0.2%, but the actual result came in at a huge drop to -0.9%. Investment Lending also declined from 5.6% to -0.1%.
It is likely that the AUID/GBP and the AUD/USD exchange rates will be subject to volatility later in the day when British and American domestic data is published.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.8877,
Australian Dollar,,Pound Sterling,0.5484 ,
Australian Dollar,,Euro,0.6957 ,
Australian Dollar,,New Zealand Dollar,1.1150 ,
US Dollar,, Australian Dollar ,1.1246 ,
Pound Sterling,, Australian Dollar ,1.8237 ,
Euro,, Australian Dollar ,1.4372 ,
New Zealand Dollar,, Australian Dollar ,0.8953 ,
[/table]
