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US Dollar Plummets, ?Kiwi? thrives, Rand Stable, Pound Heading to $1.70

Published: 26 Jun at 11 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Australia, New Zealand, USA, France, South Africa,

Pound (GBP)

Thursday will see Governor for the Bank of England Mark Carney and other policy members issue their financial recommendations for the UK economy. After Carney dampened the spirits of hopeful investors that the UK would be subject to interest rate rises in the near future, the Pound plummeted. However, Thursday sees it creeping nearer to its five year high of $1.70 against the US Dollar, with the GBP/USD pairing currently trading at $1.6988. Treasury Committee member Pat Mcfadden has suggested the BoE has been unfairly inconsistent to the people stating they were ‘left not really knowing where they stand, I mean it strikes me that the Bank’s sort of behaving like an unreliable boyfriend, One day hot, one day cold, and the people on the other side of the message are left not really knowing where they stand.’

Euro (EUR)

The Euro begins Thursday firmer against the US Dollar at 1.3634. Today sees the publication of French Jobseekers data, which the Euro could use to its advantage if it breaks the recent trend in French data and delivers a positive surprise. The Euro recently capitalised on the Pound’s losses and climbed against a struggling US Dollar. As recent fears about the outcome of the escalating Iraq conflict persist, the Euro has been able to gain against commodity currencies such as the ‘Aussie’ and the ‘Kiwi’.

US Dollar (USD)
The US Dollar has been flailing against other major currencies this week, and Wednesday brought more bad news and the lowest US Dollar index since May. Data was published showing a much stronger decline in first quarter GDP than expected. Previously residing at -1.0%, forecasts expected to see the figure fall to -1.8%, however the actual statistic showed the GDP sitting at -2.9% in the first three months of the year. BNP Paribas have commented: ‘Although there are clear headwinds for the USD at the moment... the fact that market positioning is overall flat on the USD suggests risks of a large Dollar sell-off are quite limited.’

Australian Dollar (AUD)

The ‘Aussie’ is still standing strong as we enter the latter half of the week and stubbornly reaching for the 0.94 mark against the US Dollar. With geopolitical tension climbing towards its pinnacle with the Iraq conflict escalating, the ‘Aussie’ was predicted to plummet. However, with negative GDP data from the US, the Australian Dollar has been able to maintain its strength, with economists speculating that low interest rates will be in existence for longer in the United States than they will in Australia. Economic expert Mohamed El-Erian has stated: ‘The US economy cannot run fast and long yet. And it can also be tripped up easily, despite all the experimental medicine that its doctor at the Federal Reserve continues to administer.’

New Zealand Dollar (NZD)

The ‘Kiwi’ is seeing an advantageous week with lower than expect data published in the US, the New Zealand Dollar has had the opportunity to thrive. With the ‘Kiwi’ reaching nearly its all-time high against the US Dollar, it’s been able to climb a cent against it at 0.8772. New Zealand is renowned for responding well to the economic crisis and became the first developed nation to raise interest rates. Foreign exchange expert Sam Tuck has said, ‘The Kiwi led the pack, indicative of the fact that there are not a lot of willing sellers compared to buyers.’

South African Rand (ZAR)

The Rand has been able to climb against the US Dollar this week after an end to the mining strike and poor US data releases bolstered the South African asset. The ZAR/USD pairing is currently trading around the day’s low of 0.944, but the Rand should be able to gain some short term stability against the US Dollar ahead of further predicted strikes. Rand Merchant Bank foreign exchange expert John Cairns has stated, ‘US GDP data has shocked.’ The Rand has traded up against the US Dollar by 0.21% after Wednesday’s close.
As of Thursday, 26th June 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2508, GBP USD exchange rate was 1.7028, GBP AUD exchange rate was 1.8084, GBP NZD exchange rate was 1.9381, and GBP ZAR exchange rate was 18.116.
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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