The Australian Dollar (AUD) continued its’ recent trend of falling down in value prior to the weekend and still appears vulnerable this week.
It is a relatively quiet start to the week in terms of the release of domestic data, with only New Motor Vehicle Sales figures being reported on within Australia.
Tomorrow, the Reserve Bank of Australia (RBA) will release the Minutes of their December Meeting. There has been increasing talk amongst economists’ about the RBA positioning themselves towards making a cut to the Official Cash Rate (OCR) which is currently 2.5%. If the RBA reinforce this standpoint tomorrow, we are likely to see the ‘Aussie’ (AUD) continue to dwindle.
Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Trending Around a 9 Year Low
The AUD/NZD exchange rate closed below 1.06 prior to the weekend, trading dangerously close to the lowest levels we have seen in approximately 9 years. Admittedly, similar rates were seen back in January and March of this, however, prior to that it was December 2005 when the AUD/NZD exchange rate was genuinely lower than it is now.
It has been the perfect storm for New Zealand Dollar strength over the past few weeks. Falling commodity prices, softening Australian Business Confidence and Australia’s highest Unemployment Rate in 12 years, all coupled with the Reserve Bank of Australia (RBA) leaning towards an interest rate cut has put considerable downward pressure on the ‘Aussie’ (AUD). Add to the mix a falling Unemployment Rate in New Zealand and the Reserve Bank of New Zealand (RBNZ) indicating that their next move will be interest rate rise and you have the AUD/NZD exchange rate heading south very quickly.
The RBA Minutes released tomorrow may see the AUD/NZD exchange rate continue to trend downwards if the governing body reinforce the forecast of an interest rate cut next year. The release of the New Zealand Gross Domestic Product (GDP) figure on Thursday will also be very influential in determining the movement of the AUD/NZD exchange rate later in the week. New Zealand GDP is currently sitting at a healthy 3.9%.
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Trading Close to a 5 Year Low
The AUD/GBP exchange rate is currently trading around its’ lowest levels since September 2009, representing some of the lowest levels we have seen the exchange rate in over 5 years.
Tomorrow the UK economy will release the official UK inflation rate in the form of the Consumer Price Index (CPI). Inflation is currently sitting at 1.3% and a rise to this level is likely to provide further strength to the Pound.
The Bank of England Minutes on Wednesday night will help to provide an insight into the timeframe of the next move by the Bank of England (BoE). A hawkish view by the governing body will certainly provide strength to the Pound Sterling. Conversely, if little to no reference is made in regards to the much anticipated future rate increase, then the GBP may actually dwindle.