GBP/USD fell to a four-week low

Pound Sterling

After poor UK manufacturing data left investors questioning the extent of UK third quarter economic recovery Sterling fell to a four-week low against the US Dollar. Reports which showed a 1.1 per cent drop in manufacturing output and a worsening trade deficit supported suggestions that growth in the third quarter will be more modest than hoped. This has served to heighten expectations that the Bank of England will need to implement another round of quantitative easing in the very near future. However, the Pound did rise against its European cousin for a second day after BoE Governor Mervin King commented that the heart of fiscal policy should continue to be targeting inflation. The Euro also suffered as a result of the ongoing issues in Greece and Spain.

The Pound is presently trading against the Euro in the region of 1.2445 and is trading against the US Dollar in the region of 1.6011

US Dollar

The US Dollar advanced modestly during yesterday’s morning trade but entered into a bearish relationship with the Australian Dollar as the day progressed. Today investors should pay attention to the results of Wholesale Inventory data, the US 10-year Bond Auction and the Federal Reserve’s release of the Beige Book analysis. The latter two events are considered to provide a good indication of future US interest rates and tend to trigger market volatility.

The US Dollar is presently trading against the Pound in the region of 0.6245 and is trading against the Euro in the region of 0.7769

Euro

For a third consecutive day the Euro posted declines against the majority of its peers, sliding to a week low against the Japanese Yen. Despite data revealing an unexpected 1.5 per cent rise in French Industrial Output the Euro remained lower against its American counterpart. Further depreciation in the common currency was tempered as investors await the outcome of today’s meeting between pressurised Spanish Prime Minister Mariano Rajoy and French President Francois Hollande.

The Euro is presently trading against the Pound in the region of 0.8037 and is trading against the US Dollar in the region of 1.2867

Australian Dollar

After two days of gains the ‘Aussie’ was prevented from advancing further by increasing speculation that tomorrow’s data release will show a sharp increase in the nation’s unemployment rate. If this speculation proves justified it may lead to the Reserve Bank of Australia lowering interest rates in November. The Australian Dollar was bolstered after prices for the nation’s most prominent export, iron ore, jumped to an 8-week high.

The Australian Dollar is presently trading against the Pound in the region of 0.6391, is trading against the Euro in the region of 0.7951 and is trading against the US Dollar in the region of 1.0230

New Zealand Dollar

The New Zealand Dollar declined against the majority of its peers prior to the release of data forecast to show a rise in the unemployment rate of its South Pacific neighbour. It has been estimated by economists that Australia’s unemployment rate will increase to 5.3 per cent – reaching the highest level in three months. If this prediction proves accurate than the worsening outlook of New Zealand’s largest trading partner could see the ‘Kiwi’ post further declines. Important New Zealand data to watch out for includes September’s Food Price Index, the ANZ-Roy Morgan Consumer Confidence survey and the Bank of New Zealand’s performance of manufacturing index.

The New Zealand Dollar is presently trading against the Pound in the region of 0.5106, is trading against the Euro in the region of 0.6352 and is trading against the US Dollar in the region of 0.8183

Canadian Dollar

After the International Monetary Fund slashed its estimates for global growth the Canadian Dollar made losses against the safe-haven US Dollar. However, as oil prices experienced an upwards surge the Canadian Dollar was urged slightly higher. Despite data continuing to demonstrate slowing economic growth the ‘Loonie’ posted a modest gain against its US rival.

The Canadian Dollar is presently trading against the Pound in the region of 0.6384, is trading against the Euro in the region of 0.7941 and is trading against the US Dollar in the region of 1.0227

 

Richard Martin
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After working in business development for a major UK currency brokers for several years, Richard left Britain to help set up the company’s Australian office and now lives and works in Queensland; making the most of his new Down-Under lifestyle.