AUD/GBP Rockets Higher; Brexit Trade Negotiations Delayed Until March?

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Headlines

  • ‘Aussie’ Soft as Markets Take Profit Traders capitalise on recent AUD strength
  • AUD/GBP Surges on Brexit Disappointment Markets unhappy despite EU approval for phase two negotiations
  • AUD/EUR Flat on Eurozone Trade Surplus Slump No Australian data to provide AUD support
  • USD Weakens on Concerns Over Tax Reform Markets back to questioning the likelihood Trump can deliver

Australian Dollar

With no data released from Australia and market focus on other currencies, the Australian Dollar was left to weaken on Friday. The fact that the ‘Aussie’ had risen to multi-week highs versus a number of its peers also prompted a round of profit-taking that drove AUD lower.

Minutes from the December meeting of the Reserve Bank of Australia (RBA) are set for release on Tuesday and could weaken the ‘Aussie’ if they show the board continues to hold a cautious outlook.

Sterling

Despite weakness elsewhere, AUD/GBP surged on the latest Brexit developments. The European Council agreed that Brexit talks could move onto the issue of trade, but markets weren’t happy. Multiple warnings regarding the difficulty of the job ahead weighed on Sterling, as did the suggestion from European Commission President Jean-Claude Juncker that trade talks wouldn’t begin until March.

Government borrowing figures for November are set for release on Thursday.

Euro

The Euro was on mixed form going into the weekend. The only data released from the currency bloc governed the Eurozone trade balance for October, which saw a sharp slump instead of holding around previous levels.

German Ifo business surveys are set for release on Tuesday; the Euro could receive a boost if expectations for the Eurozone’s powerhouse economy are on the rise.

US Dollar

Markets were back to questioning whether Donald Trump will ever be able to enact his plans for tax reform in the US, which weakened the US Dollar. Some soft data released overnight further soured the mood for the ‘Greenback’.

US personal consumption expenditure figures are set for release on Friday; this is the Federal Reserve’s preferred measure of inflation, so an uptick in the pace of price growth would help boost USD.

Canadian Dollar

An uptick in crude oil prices thanks to a broken North Sea pipeline wasn’t enough to prevent the Canadian Dollar slumping at the end of the week. The latest manufacturing sales figures showed a surprise -0.4% decline, against expectations of 1% growth in October.

Canadian inflation figures are set for release on Thursday.

New Zealand Dollar

Despite a relative lack of New Zealand economic data on Friday, NZD was able to record strong gains versus its peers. With many of the New Zealand Dollar’s peers – both safe-havens and risk assets – experiencing low demand, the ‘Kiwi’ was left as one of the most attractive options on the market.

While other data calendars may be starting to empty as Christmas draws near, Thursday offers the third-quarter New Zealand GDP figures.

Data Released

December 19th 10.30 AUD RBA Dec. Rate Meeting Minutes
December 19th 19.00 EUR German IFO Expectations (DEC) 110.6
December 21st 07.45 NZD Gross Domestic Product (YoY) (3Q)
December 21st 19.30 GBP Public Sector Net Borrowing (NOV) -£8.1b
December 21st 23.30 CAD Consumer Price Index (YoY) (NOV) 1.4%
December 22nd 23.30 USD PCE Core (YoY) (NOV)

Post by TorFX

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