The Pound to Australian Dollar (GBP/AUD) and Pound to New Zealand Dollar (GBP/NZD) exchange rates are forecast to see little movement due to a lack of domestic data releases for all three currencies.
Early in Monday’s session the Trans-Tasman currencies edged slightly higher against Sterling as they found support from improved market sentiment caused by the release of a better than forecast European bank stress test report.
Market sentiment improved after the European Central Bank released the results of its yearlong stress tests of the regions financial institutions. Overall, 150 banks right across the Eurozone were assessed. The report showed that only 25 banks were short of enough capital to survive another financial crisis. The report however showed that most of those 25 banks were taking action to rectify the shortfall.
The report also showed that 13 banks still needed to raise a total of €9.5 billion in extra capital, a low figure compared to many economist predictions.
Also supporting the Australian and New Zealand currencies are traders starting to form positions ahead of the weeks US Federal Open Market Committee meeting (FOMC). The Federal Reserve’s policy makers are expected to announce an ending of its monthly quantitative easing programme.
‘In the absence of any real market-moving data events, the Australian Dollar is just treading water at the moment. The market is anticipating that while the FOMC will end tapering, they’ll sound slightly more dovish in the statement to try and curb any big moves in the market. There’s going to be a lot of preparatory moves ahead of the FOMC and we do expect that to become evident later in the week,’ said research analyst Chris Tedder.
Dairy Prices Could Weigh on ‘Kiwi’
The New Zealand Dollar may have followed its ‘Aussie’ relation higher but it remains under pressure from falling commodity prices. The chief of New Zealand’s largest dairy producer Fonterra said that current dairy prices are now well below ‘fair’ expectations among the world’s dairy producers.
Also likely to weigh on the ‘Kiwi’ and likely the ‘Aussie’ too are concerns that the Trans-Pacific free trade agreement will not happen.
The deal will send a signal about the importance of the Asia-Pacific region, especially during a time of economic and geo-political instability, Andrew Robb told ministers from 12 nations involved in negotiating the pact in Sydney over the weekend, however with all the political unrest between the regions nations a deal might not be reached.
UPDATE
The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 1.8248.
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 2.0394.
On Monday night Bank of England Deputy Governor Minouche Shafik said that benchmark rigging and other misconduct is weighing on the extension of bonus clawbacks to brokers and trading firms. ‘Much has been done to strengthen the financial system,’ Shafik said in a speech at the London School of Economics. ‘But some of the benefits of these advances are being offset by a long tail of outrageous conduct cases. These are like salt rubbed into the wounds to public confidence in financial markets.’
The Australian Dollar, meanwhile, has gained from the Weekly Consumer Confidence Index which rose from 111.6 to 114.6.
A complete absence of economic data pertaining to New Zealand has seen the ‘Kiwi’ (NZD) generally soften against the majority of its most traded currency rivals.
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,0.8793 ,
Australian Dollar,,Pound Sterling,0.5465 ,
Australian Dollar,,Euro,0.6939 ,
Australian Dollar,,New Zealand Dollar,1.1174 ,
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,,US Dollar,0.7881 ,
New Zealand Dollar,, Pound Sterling,0.4891 ,
New Zealand Dollar,,Euro,0.6209 ,
New Zealand Dollar,,Australian Dollar,0.8949 ,
