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?Loonie? Losing Ground on Investor Profit Taking, US Dollar Continues to Shed Value in spite of Hawkish Policymaker Comments

Published: 12 Oct at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany,

Pound Sterling
Although it has been a relatively slow day in terms of domestic data the Pound has strengthened against a number of rivals, in particular the Euro and US Dollar. In part this is due to anticipation ahead of tomorrow’s UK Consumer Price Index data, as pundits are expecting the core figure to show an uptick from 1.0% to 1.1% on the month. Should the inflationary measure show improvement Sterling will likely see an increased appeal, as strong inflationary pressure could prompt the Bank of England (BoE) into a nearer-term interest rate increase.

The Euro has equally seen limited movement throughout trade on Monday, although continuing developments in the Volkswagen scandal have prevented the common currency from particularly appreciating. Tuesday’s ZEW Economic Surveys may spur a rally for the single currency, although the expectation is for a fresh round of declines after the weak German data of the previous week. As such, the Euro could experience fresh softening against rivals as confidence continues to falter in the strength of the Eurozone’s powerhouse economy.

US Dollar
Americans have been celebrating Columbus Day today, although that hasn’t stopped members of the Federal Open Market Committee (FOMC) from attempting to spark a resurgence for the ‘Greenback’ by reigniting rate hike speculation. Atlanta Federal Reserve Bank President Dennis Lockhart has remained hawkish, with an insistence that both the October and December meetings of the FOMC could still yield the first step in a fresh cycle of monetary tightening. Nevertheless, the ‘Buck’ has stayed out of favour with traders and remains slumped against the majority of the majors.

Australian Dollar
Monday saw the Shanghai Composite Index close at its highest level in seven weeks, adding further support to the current rally in commodity prices. Base metal values continue to look up in the wake of last week’s announcement by commodity trader Glencore of reduced zinc production, taking advantage of strong market risk appetite. Consequently the ‘Aussie’ remains on bullish form today, posting solid gains against rivals such as the Canadian and US Dollars.

New Zealand Dollar
Likewise bolstered by positive sentiment towards commodity-correlated currencies, the ‘Kiwi’ has continued to extend its gains through the day. Hawkish commentary from FOMC policymakers has failed to particularly impact the South Pacific currency as markets remain sceptical of the probability an imminent 2015 Fed interest rate hike in light of recent data.

Canadian Dollar
After having posted its largest weekly gain in six years oil has begun to retreat a little today, with Brent crude trading at $51.77, in spite of fresh predictions of slowed output from the US. Likely this is the result of a fresh round of profit taking, something which is also driving the ‘Loonie’ down against rivals.
As of Monday, 12th October 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3511, GBP USD exchange rate was 1.5344, GBP AUD exchange rate was 2.0859, GBP NZD exchange rate was 2.285, and GBP CAD exchange rate was 1.9948.
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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