Commodity Bloc (AUD, NZD, CAD) Strengthens Today as ECB Comments Push Down the Euro

Published: 27 Aug at 12 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China,

Pound Sterling
Nationwide Housing Prices for the UK this morning posted a smaller than anticipated contraction, coming in at 3.2% rather than the forecast 3.1%, to offer some encouragement over the state of the domestic economy. In spite of this, and the FTSE 100 rallying once again at opening, Sterling has struggled to make gains against either the strengthened commodity bloc or the US Dollar today.

Euro
European Central Bank (ECB) Executive Board Member Peter Praet spoke in Mannheim yesterday, weakening the position of the common currency with the suggestion that the ECB could potentially loosening interest rates in the near future as a result of current global conditions. With investor appetite deterred the Euro has consequently entered a downtrend, ceding back many of its recent gains as the sentiment swings back in favour of higher-yielding currencies.

US Dollar
September has now been all but officially ruled out as the take-off point for a Fed interest rate rise by New York Federal Reserve President Bill Dudley, previously one of the more vocal supporters of a hike within the Federal Open Market Committee (FOMC). This dovishness, however, has apparently done nothing to decrease demand for the ‘Greenback’ today as the currency strengthens across the board against all but the commodity bloc. A strong showing on yesterday’s Durable Goods Orders, which increased by 2% rather than experiencing a contraction of -0.4%, also seems a good indication that upcoming domestic data could be similarly positive and likely to boost the US Dollar further.

Australian Dollar
Profit-taking appears to be the watch word for the risk-sensitive commodity currencies today as another improvement on the stock markets leads many traders to buy back into the ‘Aussie’. As the Fed now appears to have ruled out a September interest rate rise and the Chinese government has once again intervened to buoy up the value of domestic shares the antipodean currency has returned to trending strongly against the majority of the majors.

New Zealand Dollar
As the wave of risk aversion triggered by Black Monday appears to be dying back again today the ‘Kiwi’ is seeing a significant upturn in value. After the stepped up intervention in the Chinese stock markets the commodity currency has risen, although the volatility of the situation and continued underlying issues with China’s economy make it likely that these gains could ultimately be a short-lived thing.

Canadian Dollar
With markets continuing to rally, and the situation in China potentially looking up, the ‘Loonie’ has made definite gains today on the back of improving oil prices. Both US crude and Brent have risen in value by over $1 a barrel, lifting further away from the six-year lows of Black Monday. Although this does appear to only be a temporary respite, as global production continues to pump at a high level to add to the current glut, the Canadian Dollar is nevertheless climbing against rivals.
As of Thursday, 27th August 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3708, GBP USD exchange rate was 1.5411, GBP AUD exchange rate was 2.1482, GBP NZD exchange rate was 2.3785, GBP CAD exchange rate was 2.0337, and GBP CNY exchange rate was 9.8714.

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