The Pound (GBP) continued to hover near to a seven-month high against the Australian Dollar (AUD) and was holding near to a two-year high against the New Zealand Dollar (NZD) on Wednesday both South Pacific currencies were weighed upon by disappointing ‘Aussie’ Retail Sales data.
Data released by the Australian Bureau of Statistics showed that Retail Sales in the Land Down Under came in below economist expectations to the slowest pace recorded since May. Sales increased by just 0.1% in August from the preceding month, below the 0.4% gain expected.
Retail sales have struggled for a number of years to pick up as concerns over sweeping Australian Government budget cuts and concerns over the domestic and global economies continued to cause shoppers to be wary on spending their cash.
The report showed that spending at department stores declined by 2.9% in August, the biggest drop seen since February. The sale of household goods also fell by 0.8%, a second consecutive fall.
Also weighing upon the Australian Dollar was the release of a separate report, which showed that manufacturing activity fell for a second consecutive month as the nations car industry slowed down. According to the Australian Industry Group’s its Performance of Manufacturing Index (PMI) fell by 0.8 points to 46.5 last month. A figure below 50 indicates a contraction.
“While businesses welcomed the significant correction in the value of the Australian dollar in September, it will take some time before competitiveness in domestic and export markets improve. Respondents to the Australian PMI suggested that the winding down of Australian automotive assembly and the ongoing downturn in mining construction activity are dampening demand for locally-made products and components,’ said Ai Group chief executive Innes Willox.
New Zealand Dollar Also Falls Against Pound
The disappointing retail sales report out of Australia also caused the New Zealand Dollar to weaken as investor appetite for the South Pacific currencies was sapped. The strength of the US Dollar and concerns over falling dairy prices and a slowdown in the Chinese economy were also putting pressure on the ‘Kiwi’ in a session devoid of any domestic economic data releases.
‘There was disappointing news in Australia with the weak sales report and we (Kiwi) got carried along with that. The overriding thing is the US trend that remains strong but it is getting to very heady territory so as long as the US Dollar keeps rising I don’t think there will be too many people looking to buy the ‘Kiwi’ for the medium term,’ said Imre Speizer from Westpac.
Pound Sterling to Australian Dollar Exchange Rate Forecast
The Australian Dollar is forecast to remain weaker against the Pound and US Dollar over the coming week as the markets will be focusing on data out of the USA.
If Wednesday’s US Adp jobs data and manufacturing data comes in strongly then the ‘Aussie’ has the potential to slide to a four-year low.
Sterling meanwhile gave up some of its recent gains after a Manufacturing PMI report came in below forecast, nonetheless the UK currency is not expected to fall too much and will likely remain near to its multi-month high.
UPDATE
On Thursday the Pound gave up some of its recent gains against the Australian Dollar as the South Pacific currency was supported by surprisingly upbeat building approvals and trade balance figures.
Sterling was also struggling in the wake of yesterday’s less-than-impressive UK manufacturing PMI.
However, the GBP/NZD exchange rate was able to hold on to gains as dairy prices declined again.
In the hours ahead the UK’s Construction PMI could inspire movement in both the GBP/AUD and GBP/NZD exchange rates.
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,0.8703 ,
Australian Dollar,,Pound Sterling,0.5364 ,
Australian Dollar,,Euro,0.6909 ,
Australian Dollar,,New Zealand Dollar,1.1177 ,
US Dollar,, Australian Dollar ,1.1513 ,
Pound Sterling,, Australian Dollar ,1.8626 ,
Euro,, Australian Dollar ,1.4518 ,
New Zealand Dollar,, Australian Dollar ,0.8944 ,
[/table]
