The Pound (GBP) softened against the Australian Dollar (AUD) and New Zealand Dollar (NZD) on Monday as the Trans-Tasman currencies were buoyed by improving market sentiment and as investors deemed that last week’s selloffs were overdone.
The Australian Dollar gained ahead of a busy week for economic news. The currency made gains against the Pound, US Dollar and Euro as last week’s positive US data releases eased concerns over global economic growth. Risk sentiment improved to offer support to the commodity based Aussie.
Minutes from the Reserve Bank of Australia policy meeting for October is due to be published on Tuesday and will offer an insight as to the thoughts of the bank’s policy makers.
Any talk that the currency is overvalued could weigh on the ‘Aussie’ but most economists are expecting little in the way of rhetoric.
Movement for the GBP/AUD exchange rate is likely to be muted throughout Monday’s session due to a lack of market moving data releases from the UK and Australia.
‘The tendency for traders when markets are stuck in the middle of the established short-term range is to not get involved and wait for a big move towards support and resistance then re-evaluate. Traders are largely sitting on the sidelines at this point,’ said Stephen Innes, senior Pacific trader at OANDA.
The New Zealand Dollar also regained some lost ground on speculation that investors sent shares lower last week were too gloomy about the prospects for global growth.
The main mover for the currency this week will be the latest New Zealand inflation data due later in the week.
Economists are expecting the nation’s inflation rate to slow to a pace of 1.1% from 1.6% on an annual rate.
If the figure does come in at that range, it will mark another month where inflation has been below the Reserve Bank of New Zealand’s target rate of 2%.
Chinese data Forecast to Create Volatility
Both the Australian and New Zealand currencies are likely to experience volatility on Tuesday as the major economic data out of China could restart last week’s panic.
Due for publication is Chinese Gross Domestic Product (GDP), Retail Sales and Industrial Production reports. If any of those come in below forecasts, we can expect concerns over the global economy to increase yet again. The Australian and
New Zealand Dollars in particular will be affected by the data, as China is the biggest trading partner for both nations.
UPDATE
The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 1.8350.
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 2.0206.
Tuesday has seen some positive results from Chinese economic data which has boosted the South Pacific currencies. Of most relevance was the Chinese Industrial Production was forecast to strengthen from 6.9% to 7.5%, but the actual result showed a growth of 8.0%.
The Pound, meanwhile, has softened on Tuesday morning as traders await the public finances data due for publication later on Tuesday morning.
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,0.8761 ,
Australian Dollar,,Pound Sterling,0.5436 ,
Australian Dollar,,Euro,0.6859 ,
Australian Dollar,,New Zealand Dollar,1.1025 ,
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,,US Dollar,0.7947 ,
New Zealand Dollar,, Pound Sterling,0.4931 ,
New Zealand Dollar,,Euro,0.6222 ,
New Zealand Dollar,,Australian Dollar,0.9070 ,
