27th June 2014

US Dollar (USD) Drained as ‘Kiwi’ (NZD), ‘Aussie’, (AUD) and Pound (GBP) Gain

Pound Sterling

Euro to Pound

The Pound is currently trading a little lower as investors await the UK’s Q1 GDP data, due for release this morning.

The UK has been subject to mixed reports regarding interest rate hikes with economists debating the topic hotly and Mark Carney issuing conflicting commentary over the last few weeks. Although it is clear that any rate hikes will be ‘limited and gradual’, what is less clear is when the first rate increase might occur. The Pound is currently trading at $1.7021 against the bearish US Dollar.

Euro (EUR)

The Eurozone is hoping for positive German CPI results later today to boost what has been a relatively disappointing week for the Euro by way of economic data. With French PMI achieving lower than expected figures, the Euro needs an upbeat release of data today to help it compete against other bullish major currencies such as the Pound, the Australian Dollar and the New Zealand Dollar.

US Dollar (USD)

The US Dollar hasn’t been able to hold any ground this week and has fallen, rather dramatically, to a five-week low against the Japanese Yen. Foreign exchange expert for the Commonwealth of Australia, Richard Grace, has commented:

‘The US economy is not bouncing back as quickly as expected.’ With mixed reports of US interest rate hikes surfacing, the ‘Buck’ looks to be facing headwinds. President of the Fed St Louis James Bullard stated: ‘I’m starting to think the economy could tolerate at least a little bit of the central bank getting back to a more normal stance.’

Canadian Dollar (CAD)

The ‘Loonie’ looks set to stay stable against the US Dollar with commodity prices thriving and weak US GDP data announced this week. Off the back of better than predicted inflation data, speculation surrounding an interest rate hike being on the horizon has mounted and the ‘Loonie’ could grow stronger in the coming months.

Australian Dollar (AUD)

The Australian Dollar is seeing a productive week and is holding a bullish stance in the currency market. It’s grown stronger in light of a poor week for the US and debates as to whether the US economy began tapering stimulus too soon. The Australian Dollar/US Dollar pairing is currently residing at 0.9419.

New Zealand Dollar (NZD)

The ‘Kiwi’ has been hot property this week and has gained significantly against the US Dollar. Currency expert Neil Mellor stated: ‘The Federal Reserve will clearly use any sign of weakness as an excuse to maintain the status quo (on rates) and the market wants to use the [US]Dollar as a funding currency, hence favouring the yield plays like the ‘Kiwi’, Sterling, and others.’ The New Zealand Dollar has seen a flourishing recently with regular interest rate rises; this optimism for the ‘Kiwi’ looks set to continue.

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