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Sterling Weakens Further on Limited Narrowing of UK Trade Deficit, ?Aussie? Buoyed by Fresh Base Metal Rally

Published: 13 Oct at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound Sterling
The prospects of the Pound have remained muted on Friday after the UK’s Visible Trade Balance proved decidedly disappointing. While the national deficit narrowed on the month the figure still printed at a substantial 11.1 billion Pounds to fall short of the forecast 9.9 billion. Following up an unexpectedly dovish set of minutes from the Bank of England’s (BoE) latest policy meeting, this does not paint an encouraging picture of the domestic economy. As such Sterling remained on a strong downtrend across the board ahead of the weekend.

After yesterday’s European Central Bank (ECB) meeting minutes were deemed to be somewhat encouraging by traders, in spite of the concern which policymakers expressed towards wider global economic pressures, the single currency has remained strong through Friday. With hopes raised that the central bank will not be prompted to imminently introduce fresh monetary loosening measures and no fresh data shortfalls investors have kept the Euro trending positively against rivals.

US Dollar
Dovish commentary from the September Federal Open Market Committee (FOMC) policy meeting compounded the softness of the ‘Greenback’ yesterday as the odds of a 2015 US interest rate hike continued to recede. Friday’s Wholesale Inventories for August rounded off a week of unimpressive US data, rising above forecast to produce another indication of domestic economic slowdown. Consequently the appeal of the US Dollar has diminished further as markets experience increasing risk appetite.

Australian Dollar
Although the Australian Home Loans and Investment Lending figures released overnight fell short of forecasts this failed to have a particularly negative impact on the antipodean currency. The announcement that commodity trading heavyweight Glencore will be cutting its annual zinc output, in turn reducing global production by as much as 4%, led to a strong surge in base metal prices today. As copper, aluminium and nickel, among others, were buoyed to multi-week bests the ‘Aussie’ extended its gains across the board.

New Zealand Dollar
With market risk sentiment remaining high on Friday, after the dovishness of the latest Federal Open Market Committee (FOMC) meeting minutes, the ‘Kiwi’ has continued to see heightened demand. Lowered prospects of monetary tightening from the US has lifted further weight from the South Pacific currency, bolstered further by an unexpected improvement on the New Zealand Retail Card Spending figure.

Canadian Dollar
While both the Canadian Net Change in Employment and Unemployment Rate rose above expectations today this failed to particularly damage the ‘Loonie’. In no small part the bullishness of the commodity-correlated currency is the remarkably strong week that oil has been having, being on course to post its largest weekly gain since 2006. With Brent at $53.83 and US crude above the $50 mark the ‘Loonie’ remains on strong form going into the weekend.
As of Tuesday, 13th October 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3396, GBP USD exchange rate was 1.5254, GBP AUD exchange rate was 2.1139, GBP NZD exchange rate was 2.2956, and GBP CAD exchange rate was 1.9867.
Dominic Lee About Author: (412 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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