Yesterday the ‘Aussie’ was able to advance on its British peer as lacklustre UK retail sales data weakened the Pound. While Sterling was able to recover much of its losses overnight as investors speculated on the prospect of the Bank of England increasing interest rates earlier than expected, it remained lower against a bolstered Australian Dollar.
During Australasian trading the belief that global central banks will need to maintain an accommodative easing policy in order to support the international economic recovery boosted higher-risk assets like the Australian and New Zealand Dollar.
According to foreign-exchange strategist David Forrester; ‘The central bank outlook will remain supportive in the near term. With the weaker Yen, the Aussie and Kiwi tend to outperform.’
The ‘Aussie’ trimmed its five-day decline against the US Dollar, posted its first weekly gain against the Yen for a month and strengthened against the Pound as Janet Yellen, future Chairman of the Federal Reserve, stressed the importance of supporting the US recovery with quantitative easing.
Yesterday Yellen commented that it is ‘imperative that [the Fed] do what we can to promote a very strong recovery. It’s important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero.’
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate hit a high of 0.5827
However, AUD/USD gains were limited as Yellen also stated; ‘This programme cannot continue forever. [The FOMC] is focused on a variety of risks and recognises that the longer this programme continues, the more we will need to worry about those risks.’
While positive UK data has increased the odds of the BoE raising interest rates before 2016, bolstering the Pound, the Australian Dollar consolidated gains against its British rival during Australasian trading.
Next week the Reserve Bank of Australia is due to publish minutes from its latest policy meeting. ‘Aussie’ volatility is likely to occur in response to the tone adopted in the minutes and the remarks made by the central bank concerning interest rates.
Overnight the New Zealand Dollar also advanced on its peers as Yellen’s stance lifted commodity-driven assets. The ‘Kiwi’ is now heading for a 0.4 per cent five-day gain against the US Dollar and a 1.5 per cent advance on the Yen.
Current Australian Dollar Exchange (AUD) Rates
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The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9323 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6929 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5804 >
The Australian Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.1260 >
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0742 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4431 <
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.7239 <
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.8886 >
Correct as of 10:15 am GMT