Both the Australian Dollar (AUD) and New Zealand Dollar (NZD) were softer against the Pound (GBP) and other major peers on Monday as positive data out of the USA weighed and risk aversion dented sentiment towards the South Pacific currencies.
With a lack of market moving economic data releases due on Monday the Pound and other major currencies are likely to experience little movement.
Other factors such as risk aversion or other news events will be the deciding factor as to what direction if any the currency pairs take.
Last week’s positive durable goods data out of the USA bolstered the US Dollar (USD) putting pressure upon the south pacific currencies.
The data increases speculation that the Federal Reserve could raise interest rates sooner than expected and could see the bank taper its quantitative easing programme at a faster rate.
‘The Aussie is expected to move too much today ahead of some major data releases out of the US later this week,’ said currency dealer Milica Nikolic.
Traders will be waiting for the release of key economic data later in the week for direction.
The most important releases will be Chinese and European manufacturing figures, US GDP and employment figures as well as the Federal Reserve’s July policy meeting and interest rate decision.
The New Zealand Dollar meanwhile fell to a new monthly low against the US Dollar and weakened against Sterling after Prime Minister John Key said that he agreed with the Reserve Bank of New Zealand’s assessment that the ‘Kiwi’ is overvalued.
Asked if he was comfortable if the Central Bank intervened to weaken the currency Mr Key said, ‘Yes. If they choose to do that they have a mandate under which to intervene. I think as a long-term policy tool intervention is not very effective, but they can have a short-term benefit.’
Also putting the ‘Kiwi’ under pressure is speculation that Fonterra Cooperative Group will announce a further cut to its milk price forecast.
Dairy goods are New Zealand’s biggest export and further falls in prices will have a negative effect upon the nation’s economy.
Further gains for the Pound were restrained after a report released over the weekend showed that profit warnings issued by UK companies rose to the highest level in three years.
Companies listed the strong Pound as one of the main causes. Investors were spooked by the report as it increased speculation that the Bank of England may have to intervene by trying to talk down the currency in order to support exporters.
Australian Dollar (AUD) and New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.9390 ,
Australian Dollar,,Pound Sterling,0.5530 ,
Australian Dollar,,Euro,0.6989 ,
New Zealand Dollar,,US Dollar,0.8534 ,
New Zealand Dollar,, Pound Sterling,0.5025 ,
New Zealand Dollar,,Euro,0.6352 ,
Comments are closed.