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US Dollar (USD) Dominates Exchange Rates; Pound (GBP) Softens; Euro (EUR) Firming

Published: 21 Aug at 11 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany, South Africa,

Pound (GBP)

The Pound (GBP) has seen a tricky week with the prospect of a rally shrouding its performance in the first half of the week following slightly more hawkish remarks from the Bank of England, and a split vote from their latest bank rate decision. However, today may see any gains undone in the latter half of the week as UK Retail Sales figures have flopped far lower than expected. Economists’ had forecast the data to increase by 3.1% in July, instead however the figures floundered at only 2.6% year-on-year. The Pound is presently trading against the US Dollar (USD) at 1.6582.

Euro (EUR)

The Euro (EUR) has fallen to its lowest levels against the US Dollar (USD) in almost a year this week, following renewed inspiration for the US Dollar after the latest Federal Reserve meeting minutes. However, today has revealed some hope for the Eurozone recovery with positive German PMI figures which have bolstered the Single Currency. The Eurozone’s largest economy suffered unexpected contraction in the second quarter which caused anxiety about the ongoing Eurozone recovery. However, today’s figures put a more positive spin on Germany, offering potential insight for growth in the third quarter. German Manufacturing PMI attained 52.0 in August, higher than the forecast 51.5 economists had expected. The Euro to Pound (GBP) exchange rate is presently attaining session highs of 0.8002.

US Dollar (USD)

Today has seen the US Dollar (USD) rise up in the currency market, reaching highs against the Euro (EUR) not seen since September; the present session high for the USD to EUR exchange rate is reaching 0.7552. The US Federal Reserve released their meeting minutes on Wednesday which have encouraged hope for rate hikes in the US in the near future. The minutes stated: ‘With respect to monetary policy over the medium run, participants generally agreed that labour market conditions and inflation had moved closer to the Committee’s longer-run objectives in recent months.’ This week’s Jackson Hole meeting where Chairwoman for the Federal Reserve Janet Yellen will be speaking should prove highly influential for the US Dollar, especially if Yellen discusses rate hikes.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) is facing a heavy data day tomorrow with the release of the Canadian Consumer Price Index, alongside Retail Sales figures. Presently the CPI is expected to rise to 1.9% in July year-on-year, whilst Retail Sales figures are only expected to grow by 0.3% in June month-on-month. The Canadian Dollar could soften against its US Dollar (USD) counterpart with the Federal Reserve encouraging the ‘Buck’ higher against other majors. The present CAD to USD exchange rate is residing at 0.9117.

Australian Dollar (AUD)

The Australian Dollar (AUD) has softened in the currency market following the publication of less than favourable Chinese Manufacturing PMI on Thursday. The Chinese data reached 50.3, which denotes expansion as it’s attained over the 50 threshold; however, it’s fallen short of the 51.5 economists had forecast. Forex expert Martin Lakos stated: ‘Holding above 50 is still expansionary, but probably not necessarily where we’d want it to be.’ The present Australian Dollar to US Dollar (USD) exchange rate is trading between the boundaries of 0.9238 and 0.9291.

New Zealand Dollar (NZD)

Like the Australian Dollar (AUD) the New Zealand Dollar (NZD) has felt the effects of their trading partner—China, producing poor Manufacturing PMI figures. Furthermore the ‘Kiwi’ has dipped against the strong US Dollar (USD) as hopes for US rate hikes are becoming more evident. Expert in the field Sam Tuck stated: ‘Markets are selling the “Kiwi” on the twin factors of a lack of domestic support for a move higher, and stronger US Dollar.’ The New Zealand Dollar is currently trading at 0.8377 versus the ‘Greenback’.

South African Rand (ZAR)

The US Dollar (USD) is trading between the regions of 10.7047 and 10.7460 against the South African Rand (ZAR). The Rand has been damaged from a negative Moody’s downgrading this week, which has placed less confidence in four of South Africa’s largest banks. The US Dollar popularity has found the Rand struggling in the USD to ZAR currency pairing after the Federal Reserve has encouraged confidence in the US Dollar. Expert in the field Warrick Butler stated: ‘If you have been long on the US Dollar, the smart play would be to take some off it should we get an early morning panic-spike into the high 10.70s.’
As of Thursday, 21st August 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2484, GBP USD exchange rate was 1.6579, GBP AUD exchange rate was 1.7817, GBP NZD exchange rate was 1.9738, GBP CAD exchange rate was 1.8142, GBP CNY exchange rate was 10.1983, and GBP ZAR exchange rate was 17.7354.
Patrick James About Author: (289 Posts)Patrick completed his economics degree just as the global financial crisis struck in 2008. In the intervening years Patrick has made his mark, climbing to a prominent position within a large financial services provider. As part of his role Patrick uses his expertise to advise companies of the best ways to safeguard against currency risk.

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