The Australian Dollar (AUD) strengthened against the Pound (GBP), Euro (EUR) and US Dollar (USD) early on Wednesday after it found support from positive inflation data, which supported the Reserve Bank of Australia’s aim of interest rate stability.
According to data released by the Australian Bureau of Statistics, Consumer Prices in the nation edged higher than expected in the third quarter of the year.
Consumer Price Inflation rose by 0.5%, more than the 0.4% figure forecast by economists. On an annual basis, the rate of CPI rose by 2.3% in the last quarter, matching expectations, but was down on the 3% recorded in the second quarter.
The Australian Dollar strengthened as economists deemed that the data would not affect upon the Reserve Bank of Australia’s plans to have a stable interest rate.
‘Whichever way you cut it, inflation is not a threat to the economy and the Reserve Bank will not be feeling any additional pressure to move rates in any direction any time soon. More focus will be paid to labour market conditions and retail activity in coming months,’ said an economist from Commonwealth Bank of Australia.
The Pound weakened against the majority of its most traded peers after the minutes from the Bank of England’s latest policy meeting showed that the majority of policy makers on the rate setting committee voted in favour of leaving interest rates unchanged.
Both Martin Weale and Ian McCafferty voted in favour of rate rises, a situation unchanged from the previous month. The other policy makers voted to leave interest rates unchanged at 0.5% as they felt that a rate hike would leave the UK vulnerable to geopolitical shocks. The minutes also highlighted the weakness in the Eurozone as a major reason for their decision.
Economists are now forecasting that the Bank will hike interest rates in the second half of 2015.
Against the Euro, the Australian Dollar advanced on speculation that the European Central Bank is considering introducing additional monetary easing measures. A report released yesterday that suggested that the ECB was close to implementing new measures was dismissed by ECB Governing Council Member Luc Coene.
The US Dollar softened, as economists grew jittery ahead of the release of the latest inflation data.
The last inflation report came in well below forecasts and raised fears of a slowdown in the world’s largest economy. Another weak reading and we could see investors repeat last week’s panicky sell off.
UPDATE
The Australian Dollar to Pound Sterling exchange rate is currently trending in the region of 0.5474.
The Australian Dollar to Euro exchange rate is currently trending in the region of 0.6952.
The Australian Dollar to US Dollar exchange rate is currently trending in the region of 0.8790.
On Thursday the Australian Dollar has strengthened against the majority of its most traded currency peers after data out of the world’s second-largest economy impressed. Chinese Manufacturing PMI was forecast to equal the preliminary figure for September of 50.2, but the preliminary figure for October climbed to 50.4. This is particularly positive in that the figure is moving away from the 50.0 mark which separates growth from contraction.
The common currency has also gained a little momentum on Thursday after October’s preliminary figure for German Manufacturing PMI eclipsed the forecast of 49.5, with the actual result moving to 51.8.
Ahead of Thursday afternoon’s US labour market data the US Dollar has fractionally softened against most of its major peers.
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,1.6456 ,
Australian Dollar,,Pound Sterling,0.5462 ,
Australian Dollar,,Euro,0.6916 ,
Australian Dollar,,New Zealand Dollar,1.1013 ,
US Dollar,, Australian Dollar ,1.1396 ,
Pound Sterling,, Australian Dollar ,1.8293 ,
Euro,, Australian Dollar ,1.4456 ,
New Zealand Dollar,, Australian Dollar ,0.9067 ,
[/table]
