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US Dollar (USD) Strong, ?Kiwi? (NZD) Could Benefit From Russia Sanctions

Published: 11 Aug at 10 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany, Russia, South Africa,

Pound (GBP)

The Pound (GBP) is presently trading at 1.6781 versus the US Dollar (USD), after slumping in recent weeks with poor UK economic figures. Moreover the US Dollar has sprung to popularity recently when the Federal Reserve became more hawkish in their remarks regarding interest rate hikes. The UK interest rate rises are still under speculation in anticipation for the latest Bank of England (BoE) meeting minutes. Whilst some economists anticipate a hike by the close of 2014, some feel the current levels are appropriate for some time. Economist Peter Dixon commented: ‘The degree of labour-market slack evident from wage data suggests there is no rush.’

Euro (EUR)

The Euro (EUR) is trading amid Russian sanctions with European produce heading for Russia being placed on hold. Currency expert Sam Tuck commented: ‘European supply destined for Russia may need to find a new home.’ Tuesday will see the release of the Eurozone Economic Sentiment survey whilst the German Consumer Price Index will reach publication on Wednesday. The Euro is currently trading at 1.3391 versus the US Dollar (USD) and 0.7978 against the Pound (GBP).

US Dollar (USD)

Tuesday will see the publication of the US Monthly Budget Statement, whilst Wednesday will reveal Advance Retail Sales, Mortgage Applications, and Business Inventories which may encourage the ‘Buck’ to climb higher. The US Dollar is currently trading amid an escalating Iraq conflict, which is affecting investor’s confidence in higher risk currencies, lending them to favour safe haven assets. The US Dollar is trading at 0.5959 versus the Pound (GBP) and 0.7468 against the Euro (EUR).

Canadian Dollar (CAD)

Monday will see the release of Canadian Housing Starts figures, whilst the New Housing Price Index will be revealed on Thursday, followed by Existing Home Sales numbers on Friday. The ‘Loonie’ is also presently trading amid a mass of geopolitical tensions, such as the Iraq situation and the latest sanctions placed against Russia. Expert in the field Scott Smith commented: ‘With all the different geopolitical scenarios right now, it’s definitely injecting some volatility into the market, which is usually a negative for the “Loonie”.’ The Canadian Dollar (CAD) is presently trading at 0. 9113 against the US Dollar (USD), much lower than the 93/94 US cents benchmark it has been trading at in recent months, whilst also trending in the region of 0.5425 against the Pound (GBP).

Australian Dollar (AUD)

In a fairly quiet week by way of Australian data, Tuesday will see the release of Business Confidence statistics, alongside Credit Card Balances, and the House Price Index figures. However, the ‘Aussie’ is directly impacted by the surrounding global politics that are affecting the currency market. The Australian Dollar (AUD) is currently trading at 0.9271 against the US Dollar (USD) trading slightly higher than the close of last week as the tensions shrouding Russia and Ukraine ease slightly. Expert in the field Will Richardson commented: ‘Previous flare-ups of geopolitical tensions have failed to leave a lasting impact on the currency.’

New Zealand (NZD)

Although New Zealand isn’t under the umbrella of countries that Russia refuse to trade with, warnings for New Zealand that continuing to trade with Russia could damage the reputation of the commodity nation during such tensions are rife. Trading expert Sarah Salmond commented: ‘We need to be looking carefully at the reasons others have stopped trading with Russia.’ With Russia imposing strict bans on the importing of food from the US and EU, Russian consumers will be hit hard. The New Zealand Dollar (NZD) is presently trading at 0.8463 versus the US Dollar (USD).

South African Rand (ZAR)

The present tensions surrounding Ukraine and Russia are affecting investors risk appetite in the currency market, sending currencies such as the South African Rand (ZAR) lower. South Africa will see the release of Retail Sales figures on Wednesday, followed by Mining Production statistics on Thursday. However, with such prolonged mining strikes plaguing 2014, expectations for the figures are far from high. Forex expert Christie Viljoen stated: ‘Expectation of weak local data has been broadly priced in already.’ The US Dollar (USD) is currently trading against the Rand at 10.6839.
As of Monday, 11th August 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2542, GBP USD exchange rate was 1.6787, GBP AUD exchange rate was 1.812, GBP NZD exchange rate was 1.9859, GBP CAD exchange rate was 1.834, GBP RUB exchange rate was 60.4385, and GBP ZAR exchange rate was 17.8428.
Dominic Lee About Author: (474 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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