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NZD Riding High, GBP Steady, USD on Hold before FOMC

Published: 9 Jul at 12 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, South Africa,

Pound (GBP)

The Pound declined slightly yesterday after unexpected Industrial Production and Manufacturing Production data were published for the UK revealing a much lower than anticipated figures. In a fairly quiet day for the UK on Wednesday, the Pound prepares for the US meeting minutes, due for publication later today, and data-heavy Thursday, which could see great fluctuations. Data set to be published on Thursday will include UK Trade Balance figures, alongside the Bank of England’s Asset Purchase Target and Interest Rate Decision. However speculation in the UK regarding the appropriateness for a rise in interest rates is causing debate. British Chambers of Commerce representative, John Longworth commented: ‘By driving up the cost of credit for fast-growing firms, many of whom do not sit on the same healthy cash piles as their more established counterparts, early rate rises may mean more limited growth ambitions among the very firms we are counting on to drive the economy.’

Euro (EUR)

The Eurozone has a quiet day on Wednesday by way of data releases, and the Euro may hold steady in anticipation of Thursday’s significant European Central Bank Monthly Report. The Euro will rely on the movement of other major currency peers on Wednesday to determine any fluctuations in the Single Currency. As the US will reveal the outcome of their June meeting on Wednesday evening, the Euro may be subject to fluctuations. The pairing is currently trading against the ‘Greenback’ at 1.3615. Pressure is mounting on the European Central Bank to intervene with the high rate of the Single Currency. An expert in the field, Fabrice Bregier, stated that the Eurozone: ‘Cannot be the only economic zone of the world that doesn’t consider its currency as a weapon... as a key asset to promote its economy.’

US Dollar (USD)

The US Dollar will see an interesting day on Wednesday as the meeting minutes from the Federal Reserve’s June meeting are released. However, beforehand, data regarding Mortgage Applications will be published, which could influence the ‘Buck’. An expert in the field, Masafumi Yamamoto, stated: ‘I think the contents of the minutes might turn out to be Dollar-positive. Whichever data you look at, the inflation rate in the United States) has been rising and I’m not sure that can be dismissed as just noise.’ Thursday will see a data-heavy day for the UK which could also cause the ‘Greenback’ to soften if the figures prove favourable. Initial Jobless Claims data for the US will also be released.

Canadian Dollar (CAD)

The Canadian Dollar has grown in strength recently, causing concern for the Bank of Canada who were hoping to keep their currency low. The Canadian Dollar to US Dollar exchange rate is currently trading at 0.9370, close to the ‘uncomfortable’ 0.94 cents region. An expert in the field, Craig Jerusalim, stated: ‘The ‘Loonie’ is a perplexing quagmire for [Bank of Canada Governor Stephen] Poloz who has tried to talk down the value of the ‘Loonie’. It really needs to stay closer to the 90-cent US level for it to have a long, sustainable positive effect on trade and manufacturing in Canada.’

Australian Dollar (AUD)

The ‘Aussie is currently trading higher against the ‘Greenback’ at 0.9401, in anticipation of the US meeting minutes which are released later on Wednesday. The ‘Aussie’ has managed to recover some strength after the Glenn Stevens’ statement last week suggesting the Australian Dollar would inevitably depreciate. An industry expert, David Ferranti, stated: ‘If we see the upcoming FOMC meeting minutes offer a similarly reticent tone on the prospect of an eventual rate rise, the US Dollar would likely continue its drift lower and if we see domestic employment figures continue the string of positive domestic data this week, it could help the Australian Dollar continue its climb.’

New Zealand Dollar (NZD)

Wednesday has seen the ‘Kiwi’ reach an almost three year high against the ‘Buck’, with the pairing currently trading at 0.8811 after top ratings agency Fitch positively revised its credit outlook for New Zealand.. Foreign exchange expert Boris Schlossberg stated: ‘As one of the only two currencies with any appreciable yield in the advanced industrialised universe, the ‘Kiwi’ has been the darling of the yield chasers and the upgrade by Fitch will only serve to reinforce its strength.’

South African Rand (ZAR)

The Rand has firmed against the US Dollar on Wednesday after discussions to end the current metal workers strike continue. Forex expert for the Rand Merchant Bank, Carmen Nel, stated: ‘The Rand’s outperformance yesterday may have been aided by news flow that wage negotiations in the manufacturing sector are progressing. But on balance the unit remains a relative underperformer on a longer-term trend.’ NUMSA members have stated that they will accept the most recent offer employers will propose on Wednesday, possibly ending South Africa’s latest work stoppage. Despite firming today, the Rand will be subject to some volatility as Thursday will see the release of Mining Production and Manufacturing Production data.
As of Wednesday, 9th July 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2577, GBP USD exchange rate was 1.7155, GBP AUD exchange rate was 1.8226, GBP NZD exchange rate was 1.9445, GBP CAD exchange rate was 1.8274, and GBP ZAR exchange rate was 18.2994.
Dominic Lee About Author: (372 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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