Comments issued by the People’s Bank of China regarding lifting restrictions on the value of the Yuan boosted the Australian Dollar yesterday and helped the South Pacific asset strengthen against several of its most traded peers.
A dovish speech from Federal Reserve Chairman Ben Bernanke also aided the AUD/USD pairing’s advance.
Speculation surrounding a potential timeline for the tapering of quantitative easing by the Federal Reserve has been a major cause of market movement over the last few months, and given the less-than-impressive data to come out of the US recently and the rather cautious statements issued by Fed officials, the odds of the central bank reining in easing before at least next spring have fallen dramatically.
As a consequence the US Dollar has broadly weakened, and the ‘Greenback’ softened further against its higher risk peers overnight as Bernanke stressed that even after quantitative easing ends interest rates will stay at record lows.
According to industry expert Richard Breen, ‘With Bernanke’s comments just out, people are realising that the Fed isn’t just going to get on the taper and pull back stimulus in the near-term. It’s probably going to begin in March or April next year.’
However, in a light Australasian trading session the ‘Aussie’ dipped against the US Dollar and lost ground against Sterling as Asian stocks declined and the appeal of higher-risk currencies lessened.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate hit a high of 0.5867
The ‘Aussie’ was also adversely affected by remarks made by a Reserve Bank of Australia official.
During the local session Guy Debelle stressed that the Fed tapering bond-buying would be positive for Australia as it would indicate that the US economic recovery was gathering momentum and would also trigger declines in an unacceptably strong local currency.
Mr Debelle was quoted as saying; ‘As we’ve said on a number of occasions, we would prefer [the Aussie] to be lower [and] one major thing that would do that would be the day when [the Fed] changes its monetary policy direction. The sooner that day comes the better, but that’s not in our hands – it’s in theirs.’
The AUD/GBP pairing weakened further during European trading as minutes from the Bank of England meeting showed that all nine members of the Monetary Policy Committee were in support of leaving policy unaltered.
The MPC also acknowledged that the UK employment sector was recovering faster than expected and that interest rates may need to be held at record lows even after the 7% unemployment rate target is achieved.
Tomorrow’ Australian foreign transaction data and the release of China’s HSBC/Markit Flash Mfg PMI could inspire ‘Aussie’ movement.
UK trade balance figures could also impact the AUD/GBP pairing.
Current Australian Dollar Exchange (AUD) Rates
< Lower > Higher
The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9401 <
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6935 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5829 <
The Australian Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.1279 >
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0643 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4399 >
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.7154 >
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.8874 >
Correct as of 10:20 am GMT