Fed Hike Speculation Rules USD, EUR, AUD, NZD

Published: 27 May at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Greece,

Pound Sterling
An unexpected rise in consumer confidence and further ‘Brexit’ referendum interventions have helped the Pound strengthen against several of the majors, although equally large declines have been seen verses other peers. Consumer confidence remained negative, although it rose instead of falling as predicted, climbing from -3 to -1. The G7 leaders issued a statement warning against a ‘Brexit’ and the head of the UK’s statistics watchdog openly rebuked the ‘Leave’ campaign for continuing to claim that the UK contributes £350 million per week to the EU.

Euro
It turns out the recent unlocking of Greek bailout funds only elated traders for a second, who are now back to worrying about debt relief. The fear is that all the Eurogroup and International Monetary Fund (IMF) have done is to put the contentious issue ‘out of sight, out of mind’. Euro losses have become more pronounced since the latest US data strengthened the US Dollar.

US Dollar
The US Dollar made solid advances ahead of the latest GDP estimate and has strengthened further following the release. This is despite a -0.1% revision to the quarter-on-quarter GDP estimate and a smaller-than-expected increase in the annualised prediction. The figure also shows that the US recovery remains the slowest on record, even if it is also the fourth longest period of recovery since World War II. Everyone is now anxiously awaiting a public appearance by Federal Reserve Chair Janet Yellen, although as she is only collecting an award from Havard, there’s a chance she may not make even a passing reference to monetary policy.

Australian Dollar
An advancing US Dollar has pushed the Australian Dollar deep into negative territory. A slide in commodity prices has further weakened appetite for the antipodean asset. Ratings agency Fitch has warned that the Australian banking system is vulnerable to risks from defaulting corporate loans. This is particularly worrying considering three of the four biggest banks in Australia have already had to raise their provisions for bad debts thanks to the collapse of business customers.

New Zealand Dollar
Sliding commodities and a strong US Dollar are keeping the New Zealand Dollar weak today. Risk appetite isn’t entirely extinguished, but it is directed at stocks rather than high-yield currencies. Australian shares have hit a nine-month high, while New Zealand shares rose 0.6% during the Australasian session. Meanwhile, ratings agency Moody’s has said that New Zealand’s strong fiscal and economic outlooks are credit positive.

Canadian Dollar
Crude oil has fallen back under US$50 per barrel, cutting short market celebrations and causing the Canadian Dollar to fall. Crude oil seems to find key resistance every US$5 or so, with both Brent and WTI having previously taken several weeks of trending close to, but below, US$45 per barrel before strengthening enough to remain stoically above. Experts have already warned that the move above US$50 per barrel could prove to be transient, so there is a likelihood that it will be some time before crude finally firms above the key profitability level.
As of Friday, 27th May 2016, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3172, GBP USD exchange rate was 1.4638, GBP AUD exchange rate was 2.0372, GBP NZD exchange rate was 2.1866, and GBP CAD exchange rate was 1.9058.

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