Pound in Focus, GBP Movement Likely. AUD Resiliant

Published: 8 Jul at 12 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany, South Africa,

Pound (GBP)

Tuesday will see the publication of UK data for Industrial Production, which is expected to rise from 3.0% to 3.2% YoY, and Manufacturing Production which is forecast to jump from the former 4.4% to 5.6% YoY. Currently trading at 1.7136 against the US Dollar, the Pound could jump climb higher if positive data this week continues. However as the UK awaits the Bank of England’s Rate Decision discussions, and the US anticipates the Federal Reserve’s Meeting Minutes results, the GBP/USD pair are likely to show interesting fluctuations as the week continues.

Euro (EUR)

The Euro has been struggling in the currency market recently, sinking to an almost two year low against the Pound after a string of negative Eurozone data. Tuesday however has seen the German Trade Balance beat expectations published at 18.8B for May, higher than the previous month’s 17.2 and bypassing the forecast 16.2B. Hindered by the ECB’s stimulus measures the Euro has been floundering, with disappointing data released on Monday for Germany, the Eurozone will need a series of positive results to enable gains against other strong majors. An expert in the field, Yujiro Goto, stated: ‘The German data was a bit weak and in line with recent Eurozone data. This will add to selling pressure in the Euro near term.’

US Dollar (USD)

Tuesday will see a quiet day for the US Dollar by way of data releases with only Consumer Credit figures published. This figure is expected to see a drop from April’s $26.847B to $20.000B in May. Wednesday however, is highly anticipated in the currency world, with the meeting minutes from the Federal Reserve’s assembly in June revealed. With current speculation about interest rate hikes in the US, the meeting minutes should allow some clarity from the Fed. Morgan Stanley have stated: ‘The FOMC minutes this week could reveal how the Fed views the recent rise in inflation and stronger data. The risk is that there is a divergence between the doves and the hawks on the committee. With (Fed chair Janet) Yellen staying firmly dovish, the minutes may reflect this and has a chance to put the Dollar under pressure.’

Canadian Dollar (CAD)

With the ‘Loonie’ recently growing in strength, dipping into the 94 cents region, the Bank of Canada is increasingly under more pressure to intervene, currently trading at 0.9360. The ‘Loonie’ has transitioned from the weakest currency in the first quarter to the strongest in the second quarter of 2014. An expert in the field Camilla Sutton commented: ‘It is likely too strong where it sits now. However, it’s unlikely to go back to the lows of the year.’ With countries such as Australia jawboning their currencies lower, speculation has begun on whether Canada may do the same. Economist Douglas Porter states: ‘It’s conventional wisdom that they would openly welcome a weaker currency. But they don’t want to be quite that blunt about it.’

Australian Dollar (AUD)

The Australian Dollar has climbed today edging closer to the 94 cents region it had attained before governor for the RBA Glenn Stevens suggested the currency was overvalued. However, Tuesday has brought with it June’s Business Confidence results which has seen a rise from the former 7 to 8. With unemployment data released for Australia on Thursday, economists believe that the ‘Aussie’ could boost again after previously being predicted to reach parity against the US Dollar by the end of the year. Foreign exchange expert for the National Australia Bank, Ray Attrill commented: ‘Exporters had already started to give up on any near term weakness when we were above the US95 cents last week, so there was certainly some buying on the dip, and obviously we had a surprising pick-up in business confidence today, although the details weren’t so rosy.’

New Zealand Dollar (NZD)

New Zealand has a quiet day by way of data publishing and is therefore dependent on other country’s data releases for any movement in the ‘Kiwi’. So far the ‘Kiwi’ remains relatively unchanged against its counterpart the ‘Aussie’ after the Australian Business Confidence data caused a boost for the Australian Dollar. The ‘Kiwi’ is currently trading up on the ‘Aussie’ at 0.9346, however this may fluctuate if the ‘Aussie’ surges stronger. The ‘Kiwi’ has also remained strong against the US Dollar, however with the Federal Reserve’s meeting minutes released on Wednesday; this may encourage the US Dollar to gain against other majors. Trader Stuart Ive commented: ‘We continue to wait to see the US yields increase but again the markets are still undecided as to when the Federal Reserve are going to change their policies. It’s a long way off at the end of the day, and New Zealand is still hiking rates and that is really all the market can focus on at this moment in time.’

South African Rand (ZAR)

The Rand has suffered amid the political tensions in South Africa regarding the metal workers strikes. However, Tuesday see’s the resumption of talks between employers and NUMSA, which are hopefully close to concluding the disagreement. A Labour spokesperson stated: ‘Parties are very close to an agreement. We are trying to iron out some sticky issues. Talks are at a sensitive stage.’
With the Rand pressure easing in light of a possible resolution, the possibility of the Rand gaining some stability seems possible.
As of Tuesday, 8th July 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2584, GBP USD exchange rate was 1.713, GBP AUD exchange rate was 1.8215, GBP NZD exchange rate was 1.9498, GBP CAD exchange rate was 1.8288, and GBP ZAR exchange rate was 18.2929.

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