The surprising buoyancy of the EUR, following rate cuts from the ECB, has worked to bring the cross rate back toward 0.6100. The ECB has space to continue rate cuts, while the RBA has indicated a penchant, for at least holding rates, at these elevated levels. This should support favourable conditions for the AUD, in terms of the cross-rate, with the EUR.
The current interbank midrate is: AUDEUR .6130 EURAUD 1.6313
The interbank range this week has been: AUDEUR .6050-.6130 EURAUD 1.6313 – 1.6528
The improvement in economic sentiment and confidence in the UK economy, following the election of the new Labour Government has seen support for the GBP improve. This has allowed the cross rate to move back towards 0.5100. The higher interest rates in Australia will ensure support for the currency, as the Bank of England continues to cut rates. The other threat to the GBP, is the looming first Labour budget. Serious and challenging economic conditions remain in the UK, and the preference for improving a dire fiscal position, may tempt the Government to raise tax rates. This could have a negative impact and ensure some upside for the AUD, in terms of the cross-rate.
The current interbank midrate is: AUDGBP .5160 GBPAUD 1.9379
The interbank range this week has been: AUDGBP .5100 – .5170 GBPAUD 1.9342 – 1.9607
The AUD Dollar has been travelling reasonably well, as global economic conditions improve and support for Australian commodities gathers steam. The RBA has cited serious and stubborn inflation in the economy, and promises to extend their elevated interest rate levels, until these pressures can be extinguished. This will provide support for the AUD, as interest rate differentials become more attractive, relative to other global Central Banks, and their respective currencies. The AUD has looked to regain 0.6800, with support expected to continue.
The current interbank midrate is: AUDUSD .6798
The interbank range this week has been: AUDUSD .6720 – .6820
The GBP has also shared the experience of the EUR and the NZD, following interest rate cuts, from the Bank of England. The cross rate has been relatively stable and this is likely to continue, if respective Central Banks follow the rate cutting cycle. Positive economic conditions appear to be returning to the ‘Old Country’, but significant challenges remain. There are emerging political risks, domestically and internationally, while the upcoming budget may have a negative impact. The Labour Government is facing difficult choices and possible tax rises, as an option, will not be well received.
The current interbank midrate is: NZDGBP .4760 GBPNZD 2.1008
The interbank range this week has been: NZDGBP .4700 – .4770 GBPNZD 2.0964 – 2.1276
The RBA is resisting the pressure to cut interest rates, as all but the Bank of Japan and the RBA, have indicated a preference for. The RBA board still see dangerous inflationary pressure, which will only encourage them to hold rates, at these elevated levels for longer. This has created support for the AUD, which has regained 0.6800, following the Jackson Hole announcements. Commodity prices are heavily dependent on economic sentiment, and the AUD suffered a heart tremor, when markets suffered a correction early in August, but these seem to be unwinding.
Current Level: 0.6768
Resistance: 0.6800
Support: 0.6730
Last Weeks Range: 0.6660- 0.6770
The ECB have cut rates and the interest rate differential with the AUD looks set to increase in the favour of the commodity currency. The AUD/EUR cross fell all the way to 0.5900, only to regain ground, following the August resurgence, to trade up above 0.6050. The commodity demand and interest rate differentials support a stronger AUD on the cross with the EUR.
Current Level: 1.6454
Resistance: 1.6600
Support: 1.6393
Last Weeks Range: 1.6445- 1.6570
The ECB have cut rates and the interest rate differential with the AUD looks set to increase in the favour of the commodity currency. The AUD/EUR cross fell all the way to 0.5900, only to regain ground, following the August resurgence, to trade up above 0.6050. The commodity demand and interest rate differentials support a stronger AUD on the cross with the EUR.
Current Level: 0.6035
Resistance: 0.6100
Support: 0.6000
Last Weeks Range: 0.6010- 0.6040
The Bank of England have cut interest rates, thereby attracting flows to the AUD, commodity currency. The cross rate has not varied too greatly as the GBP undergoes a honeymoon period, under the new Labour Government, and support for the GBP has been improving. This will likely not continue and expect the downward pressure, on the cross, to favour the AUD.
Current Level: 1.9525
Resistance: 1.9800
Support: 1.9230
Last Weeks Range: 1.9267- 1.9531
The Bank of England have cut interest rates, thereby attracting flows to the AUD, commodity currency. The cross rate has not varied too greatly as the GBP undergoes a honeymoon period, under the new Labour Government, and support for the GBP has been improving. This will likely not continue and expect the downward pressure, on the cross, to favour the AUD.
Current Level: 0.5090
Support: 0.5050
Resistance: 0.5200
Last week’s range: 0.5120- 0.5190
The ECB led the way on interest rate cuts, among the major world Central Banks, although the Swedish Riksbank did begin the cycle first. The ECB has been under immense pressure as recession engulfs the European economies, especially manufacturing in the engine room of Europe, Germany. The rate cuts were welcomed and allowed the cross rate to the NZD to rise to above 0.5700. The differential is contracting, as the RBNZ joins the party, and the cross rate is trading around 0.5550.
Current Level: 1.7878
Resistance: 1.8181
Support: 1.7699
Last Weeks Range: 1.7947 – 1.8211