The Australian dollar suffered a similar fate to other high
yielding currencies like the pound and the Kiwi dollar . All three had
been popular target currencies for carry trades in which investors sell
low-yielding units like the Japanese yen in search of higher returns.
Currency traders on Friday appeared happy with profits attained, making
a swift move out of the Australian dollar. This saw the Australian
dollar (a minor currency) lose ground against the pound (a major
currency)
GB POUND /AUSTRALIAN DOLLAR has gained over four cents to open this
morning at 2.3825 since lows of 2.3383 achieved in early hours on 27th
July.
We expect a range today in the GB POUND / AU DOLLAR rate of 2.3775 to
2.3875
Great British Pound
has seen massive gains this morning against the Australian dollar
after seeing massive loses against the major currencies.
We saw the rate
jump right up to 2.3800 early this morning with a correction back
down to 2.3600. We saw the rate close at yesterday’s high 2.3550
The
Australian dollar had opened weaker, losing ground overnight against
all the major currencies, including a loss of almost three per cent
against the yen.
The Australian dollar opened at 103.37/44 yen, well off yesterday's
close of 106.43/45, dragged down by a broad-based unwinding of carry
trade positions.
The dollar, however, clawed some ground back through the local
morning session and by noon was buying 104.17/25 yen.
Westpac Bank chief currency strategist Robert Rennie said the
Australian dollar had rallied from its opening low as common sense
returned to the market.
He said the state of the Australian economy and the outlook for the
Reserve Bank of Australia (RBA) were supportive of the Australian
dollar.
The RBA is widely expected to raise the official cash rate to 6.50
per cent when it meets in Sydney early next month.
"Sure we've got this sub-prime and LVO (leveraged buy-out) issue in
the US, and sure it's having an impact on financial markets
globally," Mr Rennie said.
We expect a range today in the GBP/AUD rate of 2.3600
– 2.3700
The Pound Sterling continues trade firmly against the Greenback
holding onto gains above 2.0600 overnight despite some signs of a weaker
UK manufacturing sector. Investors preferred to focus on the struggling
USD and took the GB POUND /US DOLLAR to a high of 2.0650 to close in NY
at 2.0630. In trading against the Aussie dollar the Pound surged from a
European low of 2.3280 to exchange at a high of 2.3400 before pulling
back slightly to open in Sydney at 2.3365 ahead of today’s much
anticipated Australian CPI data.
We expect a range today in the GB POUND / AUSTRALIAN DOLLAR rate of
2.3300 to 2.3400.
Monday 23rd July 2007
The Pound Sterling continued its rally against the Greenback on
Friday night posting a new 26 year high on the back of gains fuelled by
persistently strong UK economic growth data. The second quarter GDP
result of 0.8% represents the sixth consecutive quarter of 0.7% or more
holding its annual rate of 3%. Coupled with a weaker US Dollar, the GB
Pound hit a high of 2.0585 before settling around 2.0550 in late NY
trading. Profit taking on the Aussie dollar sees the GB Pound/Australian
Dollar rate open higher in Sydney this morning, exchanging at 2.3380
after closing in Asia on Friday at 2.3250.
Friday 20th July 2007
Sterling eased overnight following the release of diminished retail
sales and home lending data overnight. After a stagnant session of Asian
trade, the Pound’s four day appreciation came to an end immediately
following the release, with losses compounded by suggestions from Bank
of England Governor Mervyn King that inflation seemed to be moderating.
After dropping to a low of 2.0469, the pair has steadied to open this
morning at 2.0490. The Pound is looking shaky on the crosses, with GBP/AUD
trading at 2.3287 and GBP/NZD changing hands at 2.5832. Since the early
hours of this morning and leading up to strong UK GDP data release at
9.30am the pound has risen to over 2.3300.
Wednesday 18th July 2007
Sterling made further gains overnight of it’s own accord following
the release of strong consumer inflation figures and increased
speculation that rates in the UK may once again be on the rise. The CPI
figures showed that prices gained an annual 2.4% for June, which leaves
the figure outside the BoE’s target range of two percent for a 14th
month in a row. The number has helped GBP/USD to open this morning at
2.0466 while GBP/AUD is trading higher at 2.3469 and GBP/NZD is also on
the move at 2.5947. Tonight’s release of the Bank of England’s minutes
from their last meeting will see the market trying to guess the central
bank’s next move.
- We expect a range today in the
GBP/AUD rate of 2.3410 to 2.3510
Monday 16th July 2007
Sterling continues to slip on the crosses, and opens the week at
2.3376 against the Australian dollar, and 2.5845 against the Kiwi
dollar. While tonight’s calendar is blank, tomorrow night sees the
release of consumer inflation data which should have analysts once again
trying to pick the next move from the Bank of England.
The reserve bank of Australia held rates at 6.25% on July 3rd amid tame
inflation reports. The next focus for the central bank will be the
consumer inflation data due on July 25, with economists saying any
increase in either the headline or core inflation raising the risk that
the RBA may tighten monetary policy sooner rather than later. If the RBA
signals a rate hike we would expect further buying of the AU Dollar
pushing the
GB Pound / AU Dollar rate down further.
Gold was steady at higher levels on rising oil prices and the continued
weakness of the dollar, as trade in the precious metal was light with
Japanese investors absent from the market due to a public holiday. The
price of gold can affect AUD dollar rates as it is a major export for
Australia. Rising gold prices over the last few years have strengthened
the AUD.
We expect a range today in the
GBP/AUD rate of 2.3275 to 2.3375
Wednesday 11th July 2007
Early morning trading has seen sterling gain against the Australian
dollar with push up in the exchange rate by over 1 cent.
That’s a move from the 2.34 to the high 2.35 area, slightly lower than
today’s high of 2.3612. This has mainly been down to sterling strength
in the market with a narrowing in the UK trade gap (importing against
exporting) and a strong BRC retail sales survey, collectively supporting
a cause for further interest rate hikes in the UK. Last night one of the
MPC (Bank of England) Andrew Sentence spoke commenting that there was
little chance of overkill in rates with the healthy robust growth and
rising global inflationary pressures. We are expecting the AUD to go
above 2.3600 against the pound.
Tuesday 10th July 2007 Interbank GB POUNDS / Australian Dollars 2.3453
•
Dollar starts well this morning eking out some gains
As expected a quiet day for the dollar and
US markets with no data to provide any direction. Cable did manage to pop back up to the mid 2.01 range however Euro-dollar traded in a
narrow band yesterday.
Borrowing figures by US consumers rose more than forecast a Fed survey
showed. In the face of a weakening housing market US consumers are financing their spending by racking up
larger credit card bills. Non-mortgage loans rose by an annualised 6.4% to $2.44 trillion. This is
unlikely to cause the Fed to cut rates any time soon.
This morning the dollar has started well with Asian demand driving the
greenback higher. Cable has dropped
off by about 20 pips and Euro dollar is again testing the 1.36 level.
Stateside today we have Wholesale
Inventories at 1500BST and ABC Consumer Confidence at 2200BST.
Friday 3rd July 2007 Interbank rate 2.3826
The Bank of England kept interest rates on hold overnight at 6 year highs of 5.75% as it preferred to wait and see what influence recent increases would have on inflation.
The quarterly inflation report due on the 8th of August for the UK should provide more of an insight as to what the MPC will do next with reference to further hikes. Rates are expected to reach 6% by year end. This sentiment leaves sterling strong against the major currencies (EUR/USD) but at reasonable levels against minor currencies like the Australian dollar.
After experiencing resurgence towards 2.3900 yesterday a rebound in the Aussie dollar overnight sees the rate creep back up from this morning’s low of 2.3700 to wards 2.3800. This is contrary to Alan Bollard (Reserve Bank of NZ governor) view that the aussie dollar is not under threat from yen carry trade.
The reserve Bank of Australia is not expected to increase the base interest rate next
week.
We expect a range today in the GBP/AU DOLLAR rate of 2.3700 to
2.3800.
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