Overnight the Australian Dollar made considerable gains against the Pound Sterling. The UK economy fell short in terms of their targeted Industrial and Manufacturing Production levels. The NIESR Gross Domestic Product Estimate also came in less than the previous month’s estimate, indicating slower growth and expectations than perceived by economists a few weeks ago. The combination of these events saw the AUD move up about three quarters of a percent against the GBP despite the political instability and increased tensions between Russia and the Ukraine.
A large degree of volatility is expected for the Australia Dollar today around 11:30am AEST when Australia releases their current employment figures. Australia is targeting an additional 13.2K jobs to be added to the economy with the official Employment Change figure. The Unemployment Rate is currently sitting at 6.0% and the economic forecast is that it will remain the same. With a positive Employment Change figure being printed last month, but a negative Full Time Employment Change figure, economists will pay close attention to the breakdown of full time and part time jobs that contribute to the overall Employment Change figure released today.
This evening the Bank of England Rate Decision will be announced and once again rates are expected to remain on hold at 0.5%. The accompanying notes will be the likely market mover rather than the actual decision itself, however, the economic consensus is that the BoE are moving ever-closer towards an interest rate hike. The Pound is likely to strengthen if the rhetoric from the accompanying notes suggest that an interest rate rise is approaching is the near future.
Tomorrow the RBA will make their Monetary Policy Statement. Investors will look to this economic release for an elaboration of how the RBA perceives current inflation levels in Australia and whether they will be implementing an interest rate rise or decrease later this year. The underlying tone in reference to the timeframe of an interest rate rise or fall is likely to either increase or devalue the value of the AUD. Economists have mixed perceptions as to the next move by the RBA, so this release will undoubtedly shed some light on the governing bodies’ position regarding the cash rate; following on from their decision earlier in the week to keep rates on hold at 2.5%.
These major economic releases are sure to add volatility to the current tug-of-war between the Australian Dollar to the Pound Sterling. The Aussie has held its ground despite recent economic forces attempting to push down its’ value and last night’s economic data show that the currency market is not ignoring poor print figures. The latter half of this week give momentum back to the Sterling however, the AUD is not willing to give ground easily as the ongoing tussle between this currency pairing continues.