The Australian Dollar (AUD) has shown its’ continued vulnerability to downward movement by falling close to a full percent against the majors overnight, extending the recent trend of declining in value.
Yesterday’s domestic data indicated that Home Loans in Australia and Investment Lending increased for the month of December. It provided no assistance in lifting the value of the Australian Dollar however, with weakening commodity prices continuing to weigh down on the South Pacific currency.
Consumer Inflation Expectation will be released out of the Australian economy today prior to the employment figures being announced. The previous reading was 3.2% and it is likely that we will see this soften. Looking forward, there appears to be a lack of substantial economic data set to assist in lifting the Australian Dollar (AUD).
The main economic event this week concerning the AUD will take place at 10:30 AEST today when the official Australian Unemployment Rate is announced. Australia’s Unemployment Rate is currently sitting at 6.1% and the forecast is that it will increase to 6.2%, with approximately 5,000 jobs being erased from the Australian economy for the month of January. If the expected result comes to fruition we may see the ‘Aussie’ (AUD) suffer further declines and move toward fresh 5 and half year lows against the US Dollar (USD) and Pound Sterling (GBP).
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Hits a New Five and Half Year Low
Overnight the AUD/GBP exchange rate hit the lowest level it has been in five and half years, however, tonight’s economic release out of the UK could provide an opportunity for the rate to bounce back, even if the Australian employment figures are not favourable to the economy.
This evening the Governor of the Bank of England (BoE), Mark Carney, will hold a press conference relating to the governing body’s Inflation Report. With the Consumer Price Index (CPI) currently sitting at the lowest it has been in over 14 and half years at 0.5%, economists are expecting the BoE to communicate that lower inflation is expected for 2015 than previously thought. There has also been talk of the BoE mentioning a period of ‘deflation’ in the report, which would the first time in 55 years that the UK has experienced such economic conditions.
Overall, it will be the underlying tone taken by Mark Carney that is likely to impact the AUD/GBP exchange rate; with a positive tone and outlook likely to push the exchange rate down, and a concerning tone likely to give a lift to ‘Aussie’ (AUD) against the ’Pound’ (GBP).