Foreign Currency Update
News Posted On: 08 January 2015
A brief look at the foreign currency markets from around the world with updated information on movements and causes to the current rates.
The Pound weakened against most of its major peers after data showed that British house prices increased by 7.8% in the three months to December, the increase was the weakest recorded since January 2014 adding to signs that the UK economy is experiencing a slowdown. Also weighing upon the currency are expectations that today’s Bank of England of England Interest Rate decision will suggest that the bank plans to refrain from hiking rates until later in the year as domestic data continues to come in below forecasts.
The US Dollar remained stronger against the majority of its most traded peers after a report released on Wednesday showed that the US private sector added a larger than forecast 241,000 jobs in December. The positive report increased speculation that the Federal Reserve is moving closer to hiking interest rates.
The Euro moved higher against the Pound but remains weaker against the US Dollar and most other major peers as speculation mounts that the European Central Bank will have to introduce new monetary stimulus measures following the release of data, which showed that the Eurozone inflation slipped into deflation territory in December. Also weighing on the currency was a report showing that monthly German factory orders fell sharply by -2.4% from the previous months revised figure of 2.9%.
The ‘Aussie’ eased away from a five-and-a-half year lows against the US Dollar and made gains against the Pound after domestic data came in positively. According to the Australian Bureau of Statistics, building approvals increased by 7.5% in November to beat expectations for a 3.5% decline. Building approvals rose by 11.5% in October, whose figure was revised from a previously estimated 11.4% gain.
New Zealand Dollar
The New Zealand Dollar strengthened against the Pound and most major peers as rising dairy prices and a positive outlook for the New Zealand economy increased demand for the ‘Kiwi’. Against the Euro the ‘Kiwi’ is trading at a 20-month high.
The ‘Loonie’ regained lost ground against several major peers due to oil prices recovering and an improvement in risk appetite following the release of positive economic data out of the USA. Oil prices rebounded after an official weekly oil report from the Energy Information Administration showed oil stockpiles in the US to have declined more than expected last week.
South African Rand
The Rand made gains against the weakened Pound due to the improvement in risk appetite and increased demand for higher yielding emerging market assets.
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