Commodity Slump Continues to Drag ‘Aussie’ (AUD) Down as Building Approvals Fall This Month
Things have not been looking up for the ‘Aussie’ (AUD) this week as commodity prices continue to collapse, hitting new lows as the Chinese stock market remains in a downwards trend. In spite of Beijing attempting to stabilise prices, shares remained at their worst levels in years this week, with the values of copper and other major metals similarly sliding. Yesterday’s month-on-month Building Approval data only compounded the issues for the South Pacific currency, severely disappointing with a result of -8.2% instead of the forecast -1.0%.
Next week’s rate decision by the Reserve Bank of Australia (RBA) might hold some hope for the ‘Aussie’ to achieve a rally should it defy expectations and imply more hawkish sentiment. However, with the RBA expected to hold rates at the current low of 2% the outlook is not enormously bullish for the Australian Dollar.
Presently the GBP/AUD exchange rate is trending in the range of 2.1290.
Dairy Market Remains Weak to Undercut New Zealand Dollar, GBP/NZD Exchange Rate Still Running Near Six-Year High
Similarly affected by the Chinese slowdown, the ‘Kiwi’ (NZD) has nevertheless taken slightly less of a battering than its antipodean cousin this week. The Business Confidence index for July was released today, demonstrating a six-year low as pessimism increasingly dominates New Zealand’s economy. Adding to speculation that the Reserve Bank of New Zealand (RBNZ) will cut interest rates further before the end of the year this dismal result naturally saw traders deserting the currency for its rivals.
Although the biggest movers for the ‘Kiwi’ are likely to be Tuesday’s unemployment rate and change figures it seems unlikely that the currency will be able to particularly recover should results beat expectations as commodity prices remain in a slump.
Nevertheless, the GBP/NZD pairing saw a sharp drop in recent hours to go from a daily peak of 2.3834 to a low of 2.3523.
Canadian Dollar (CAD) in Trouble as Recession Confirmed by Today’s GDP Report, GBP/CAD Exchange Rate Benefits
Canada has officially entered a recession today as the GDP report posted a decline of -0.2%, marking economic contraction in six of the last seven months to confirm what pundits had already suspected. This figure was lower than anticipated, however, and has seen the Canadian Dollar sharply decline across the board. As risk-sensitive currencies suffer amidst increased demand for safe-havens in the currently turbulent global market the ‘Loonie’ is unlikely to see any improvement in its outlook soon.
With unemployment data due out at the end of next week there could be a rally in store for the Canadian Dollar, although any gains would be hard pressed to restore more than a little of the value it has lost lately.
At time of writing the GBP/CAD exchange rate was trending upwards in the range of 2.0374.