AUD/GBP Climbs, but Australian Dollar Looks Vulnerable

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Headlines

  • Pound exchange rates fluctuating: David Davis clashes with Irish government
  • US Dollar sturdy: Fed expected to hike rates this week
  • BoC dovish on future rate hikes: but CAD recovers from worst levels
  • New RBNZ governor announced: NZD exchange rates surge

Australian Dollar (AUD) Exchange Rates Soften on Falling Iron Ore Prices

The tumbling price of iron ore, one of Australia’s key commodities, put Australian Dollar exchange rates on the back foot at the tail end of last week.

However, the ‘Aussie’ swiftly recovered losses against a broadly softening Pound and could bounce higher if the National Australia Bank (NAB) business conditions and business confidence figures impress. The Business confidence index previously came in at 8.

The outlook for AUD/USD is less encouraging however, with National Australia Bank (NAB) currency strategist Rodrigo Catril asserting; ‘AUD ended Friday almost unchanged, but looking at the chart the currency remains vulnerable to the downside. The soft weekly close — down 1.4% – has left the AUD vulnerable to the downside with key support level at 0.7490 now well within sight.’

Pound Sterling (GBP) Exchange Rates Fluctuate on Brexit Developments

After initially rallying on Friday in response to the news that the UK had struck an exit deal with the EU, Pound Sterling (GBP) exchange rates broadly weakened on rumors trade talks could be delayed until February.

Sterling remains down from last week’s best levels, despite Prime Minister Theresa May claiming that there is a new ‘sense of optimism’ in Brexit talks.

Separate reports that the Irish government was clashing with Brexit Secretary David Davis over the agreement reached with the EU over the Irish border undermined the Pound. Davis claimed that the deal was merely a ‘statement of intent’ and may not be enforceable.

Irish Prime Minister Leo Varadkar hit back at this by asserting that the deal was both cast iron and politically bullet proof, and Davis later retracted his comments.

Monday’s only UK data, the Rightmove House Price report, showed a -2.6% decline in prices on the month, resulting in an annual figure of 1.2%.

While Brexit news is likely to remain a main cause of Pound movement this week, investors will also be looking ahead to upcoming UK inflation figures. Inflation is expected to hold at 3.0% on the year, but a surprise result could spark GBP volatility.

Euro (EUR) Exchange Rates Weakened by Narrowing German Surplus

News that Germany’s trade surplus had narrowed significantly more than expected in October put the Euro under a little pressure ahead of the weekend.

An unexpected -0.4% decrease in exports and a 1.8% surge in imports saw the surplus decline from 25.8b to 18.1b.

A lack of news from the Eurozone limited EUR movement on Monday, but today sees the release of the German and Eurozone economic sentiment surveys for December.

The German index is believed to have fallen from 18.7 to 18.0. Such a result might leave the Euro weaker.

US Dollar News: USD Exchange Rates Supported by US Jobs Data

The US Dollar began the week by holding steady against its main currency counterparts, and USD exchange rates are likely to remain supported due to the fact that the Federal Reserve is expected to increase interest rates at this week’s gathering.

That being said, if Thursday’s policy statement indicates that rates won’t be hiked as regularly in 2018, USD exchange rates could tumble.

Canadian Dollar (CAD) Recovers BoC Related Losses

After sliding last week in response to a fairly dovish policy statement from the Bank of Canada (BoC), the Canadian Dollar managed to recoup some of its losses despite fluctuating oil prices.

This week is fairly devoid of influential data from Canada, so CAD exchange rates will largely be left at the mercy of global economic developments.

New Zealand Dollar (NZD) Jumps on Appointment of New RBNZ Governor

The New Zealand Dollar (NZD) is riding high after surging in reaction to the appointment of a new Governor for the Reserve Bank of New Zealand (RBNZ).

Adrian Orr has been named as the next Governor and his extensive experience has led many to believe that the central bank will be in safe hands under his leadership.

The New Zealand Dollar advanced by over 1% against the Pound, Euro and US Dollar on Monday.

Data Released

Tuesday, 12 December, 2017
11:30 AU NAB Business Confidence (Nov)
20:30 UK Inflation (Nov)
21:00 DE ZEW Economic Sentiment (Dec)
21:00 Eurozone ZEW Economic Sentiment
21:00 DE ZEW Current Situation (Dec)

Post by TorFX

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