Australian Dollar (AUD) Trends Upwards Against the Majors

The Australian Dollar (AUD) pushed up against the Pound Sterling (GBP) and US Dollar (USD) prior to the close of last week’s trading session. It remained stagnate against the Euro (EUR), holding most of the ground it made mid-week. It is currently trending upward against this majors this morning.

Only low tier economic data in the form of New Motor Vehicles is scheduled to be released out of Australia today. The more significant domestic release will occur tomorrow when the Reserve Bank of Australia (RBA) release the Minutes of the November Meeting.

The G20 Summit was held in Brisbane over the weekend. Australia’s Prime Minister, Tony Abbott described the event as a ‘weekend of achievement’. The G20 leaders agreed to strive to achieve 2.1% global growth by 2018 and adding $2 trillion to global economies. Mr Abbott communicated that Australia will be specifically focused on boosting growth and employment, enhancing global economic resilience and strengthening global institutions. The Australian Dollar has increased in value since this week’s trading session opened which could possibly be attributed to a successful G20 Summit within Australia.

Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Hits 2 Month High
The AUD to GBP exchange rate had been quite range bound for the past few weeks, however the ‘Aussie’ hit a 2 month on Friday last week against the ‘Sterling’. The reason for the AUD was able to break out of the range was because of the bearish Bank of England (BoE) Inflation report out indicating that the governing body forecasts lower inflation in the future.

The next major movement for AUD to GBP exchange is forecast to occur tomorrow evening, following the release of the UK Consumer Price Index (CPI). The annualised UK inflation rate is currently 1.2% and the forecast is that we will see no change to this figure for the moment. With the BoE expecting lower inflation in the future, this provides the opportunity for the AUD to GBP to push up further following the release.

Australian Dollar to Euro (AUD/EUR) Exchange Rate Trading Around 2 Month High
The AUD to EUR exchange rate hit a 2 month high following on from a speech made by Mario Draghi, Head of the European Central Bank (ECB) last week. Draghi highlighted that interest rates in the Euro-Zone will remain low and that the ECB will take ‘further unconventional policy actions should medium-term inflation expectations worsen’.

The German Gross Domestic Product (GDP) and Euro-Zone GDP figures were released Friday evening. The forecast was for the annualised German GDP to increase slightly, but the annualised Euro-Zone GDP figure to actually decrease from 0.8% to 0.7%. The result was better than the forecast, with German GDP increasing to 1.2% and the Euro-Zone GDP remaining at 0.8%. This caused the AUD to EUR exchange rate to remain stagnate, limiting any further gains for the ‘Aussie’ against the Euro prior to the weekend.

Economists’ will now look to the German ZEW Survey tomorrow evening for an indication as to which way the AUD to EUR exchange rate will trend this week.

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Bounces Back
The AUD to USD exchange rate recovered slightly last week, after hitting a 4 year low the week before.

Advance Retail Sales and the University of Michigan Confidence Index were announced late last Friday night. The forecast was a minor improvement to both economic indicators and although the result was positive for the US economy, the AUD to USD exchange rate continued its’ upward trend, gaining over half a percent.

Industrial and Manufacturing Production figures for the month of October will be released late this evening and may influence the AUD to USD exchange rate overnight.

Terry Finn