The Australian Dollar has extended the gains that it made earlier in the week against the majors and minors, resulting from the Reserve Bank of Australia ‘s (RBA) decision to keep interest rate on hold at 2.25%. The ‘Aussie’ (AUD) still appears vulnerable to continue the recent trend of further downward movements; however it is currently finding some buoyancy on the currency market, with big positive movements overnight against the EUR and GBP and minor gains against the USD and CAD.
Yesterday the Australian economy released the AIG Performance of Construction Index which proved to be the expansion figure of 50.1 from the contraction figure of 43.9 previously. Today, Australian Home Loans for February are expected to increase from -3.5% to 3.0% due to increased demand from home loans resulting in the RBA February rate cut.
Chinese data in the form of the Consumer Price Index (CPI) and Producer Price Index (PPI) will be released at 11:30 AEST. The annualised Chinese CPI figure is forecast to reduce from 1.4% to 1.2% with PPI expected to remain at -4.8% for the month of March.
The next major announcement out of the Australian economy will occur next Thursday with the release of employment figures. The Australian Unemployment Rate is currently sitting at 6.3%. The Australian Dollar will likely need a reduction to the Unemployment Rate through a higher than expected Employment Change figure if it is to continue to hold and extend the gains it has experienced this week.
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Jumps 3% Over 3 Days
The AUD/GBP exchange rate has pushed up a whopping 3% over the past 3 days as the ‘Aussie’ (AUD) continued its rally against the ‘Pound’ (GBP) overnight.
Overnight the Bank of England (BoE) announced their April rate Decision, with no surprises that the official cash rate was placed on hold at 0.5%. Rates will remain unchanged at least until after the UK general election, with policy-makers feeling that low inflationary pressures do not currently warrant an interest rate hike.
The UK Trade Balance released overnight was also much worse than anticipated, with imports outweighing exports to the tune of -10.3B (GBP) when -8.9B (GBP) was expected. This allowed the AUD/GBP exchange rate to continue to capitalise on its’ recent rally and lift by approximately 1.25%. Tonight UK data in the form of Industrial Production and Manufacturing Production will be influential to the AUD/GBP exchange rate, with a reduction to both industries expected.
The next major announcement likely to sway the AUD/GBP exchange rate will occur next Tuesday evening with the release of the UK Consumer Price Index (CPI). The annualised UK CPI is currently sitting at the lowest it has been in over a decade, at 0.0%. If a deflation figure results, we will likely see the AUD/GBP continue its’ recent positive movement.
Although the short-term trend of the AUD/GBP exchange increasing may actually continue into next week, the medium-long term outlook of the AUD/GBP exchange rate still appears weak due largely to the increasing likelihood of the RBA proceeding with another interest rate cut this year.