Although economists forecast that today’s UK employment figures would show a positive jobs gain in February, the Pound spent much of yesterday locked in a bearish relationship with its major currency counterparts.
Sterling was trading lower against peers like the Australian Dollar as the European session closed, but the GBP to AUD exchange rate enjoyed a modest rebound overnight.
The news of the collapse of China’s largest private property developer pushed the Yuan and Chinese stocks lower during Australasian trading. The ‘Aussie’ consequently broadly declined and the Pound was able to edge higher.
Zhejiang Xingrun’s collapse sparked concerns that the property developing industry could face defaults, and as China is Australia’s main trading partner the Australian Dollar came under pressure.
However, the AUD to USD exchange rate continued trading fairly close to a three-month high before the influential Federal Open Market Committee policy meeting.
The fact that the Australian Dollar has weathered the recent storms (Ukraine inspired risk-aversion, fears of a slowdown in China etc) so valiantly has recently led to analysts positively revising their forecasts for the South Pacific asset.
Although some industry experts see the ‘Aussie’ softening in response to the reduction in US stimulus, Westpac expects an improving trade outlook to lift the currency over the next two years.
Westpac strategist Sean Callow was quoted as stating; ‘What we have been keen to argue is how much the trade position is likely to improve over the next year. We are already running trade surpluses. By 2016, the overall current account position will approach balance. So that’s a very strong positive for the Aussie further out. The key point is that it’s not just a steady decline until further notice.’
As Tuesday’s European trading session got underway the Pound clung on to gains against the ‘Aussie’ even after the publication of slightly disappointing UK employment figures.
The economy added 105,000 positions in the three months to January rather than the 110,000 expected.
The UK unemployment rate held at 7.2 per cent.
However, jobless claims fell by 34,600 in February and domestic weekly earnings climbed 1.3 per cent in the three months to January year-on-year, a slightly better result than the 1.2 per cent gain expected.
Sterling movement was also a little limited before Chancellor of the Exchequer George Osborne presented the national budget.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar, 0.9110,
Australian Dollar,,Euro, 0.6547,
Australian Dollar,,Pound, 0.5485,
Australian Dollar,,New Zealand Dollar, 1.0584,
US Dollar,,Australian Dollar, 1.0973,
Euro,,Australian Dollar, 1.5257,
Pound Sterling,,Australian Dollar, 1.8230,
New Zealand Dollar,,Australian Dollar, 0.9437,
[/table]
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