1st July 2014

AUD Bullish against Major Peers, GBP Softening

Australian Dollar (AUD)

Australian dollar exchange rate

In benefitting from on-target rate decisions by the Reserve Bank of Australia, the ‘Aussie’ ended June at close to a month-high and has entered July at a comfortable 0.94 against the US Dollar following last week’s disappointing US economic growth report.

The head of Australian economic and fixed-income strategy at the Royal Bank of Canada has declared that ‘rates are likely to remain low for an extended period’. Similarly, the Australian Dollar is bullishly succeeding against the Euro, maintaining last month’s high and remaining above the 0.69 level.

US Dollar (USD)

The US Dollar is benefiting from the softening of the Pound, having strengthened to the 0.5848 level and drawing close to the day’s high of 0.5850. This level is set to rise, pending the ISM Manufacturing index data for June, which is predicted to have risen from the previous month.

The US Dollar to AUD pairing is continuing to fall from June’s high of 1.07 and shows signs of further weakening. Along with the ISM Manufacturing index data, investors are waiting on news of the US’ Economic Optimism data for July which is also predicted to have risen from last month.

The Euro (EUR)

The Euro has weakened slightly against the Australian Dollar but is maintaining its trend from the end of June of small fluctuations around the 1.45 mark, just shy of the month’s high of 1.50.

Compared to the US Dollar, the ‘single currency’ is continuing to climb away from a month low and is benefitting from the revision to the Eurozone’s unemployment rate, which was shown in a report published this morning. However, Euro-Zone and German Manufacturing PMI data has returned lower than expected, which may well soften the Euro over the course of the day.

New Zealand Dollar (NZD)

After a month spent hawkishly climbing against the ‘Buck’, the New Zealand Dollar appears to be settling at the high 0.87-0.88 mark, following yesterday’s business confidence data showing a decline in June.

Against the Euro, the ‘Kiwi’ has fallen from the month high and is now maintaining the 0.64 level, although this is still a significant development from June’s low of 0.62. New Zealand stocks have risen, following New Zealand Oil and Gas having secured $5 million in historic royalties, suggesting the New Zealand Dollar could be subject to strengthening further down the line.

Canadian Dollar (CAD)

The Canadian Dollar continues to maintain a strong position against the ‘Buck’ in spite of yesterday’s poor GDP results, however against the Pound the ‘Loonie’ is dovishly submitting to the disappointing figures and continuing to drop steeply from June’s month high of 0.55. The Canadian Manufacturing PMI is due to be released tomorrow and this could reduce the decline if the data shows an improvement from May’s four-month low.

South African Rand (ZAR)

After softening against the US Dollar following a report detailing South Africa’s 3-month low trade deficit, the Rand is beginning to stabilise at the 0.0941 level, and is also continuing to climb out of the month-low for June against the Ruble. This modest strengthening comes as a result of Ukraine’s crisis negatively affecting the appeal of Russian assets.

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