The Australian Dollar wrapped up trading at the end of late week in a position of strength, having been boosted in value by further signs of hesitancy from the US Federal Reserve about a possible near-term interest rate hike. Australian economic announcements are expected to be limited this week.
The Pound closed trading on Friday on a flat note, having fluctuated towards the end of the week on uncertainty about how the UK was faring after the EU Referendum. Vital PMI results are due next week, which will give a clearer picture of the situation.
The ‘Aussie’ made considerable gains against the Pound and other regular peers after the high-impact speech of Fed Chair Janet Yellen last week, having been lifted by the converse deterioration of the US currency.
Although the Fed chair spoke of a ‘strengthening’ case for another rate hike, this was too timid for bullish markets, which resulted in global commodity currencies rising considerably on the news.
Given the lack of Australian data towards the end of the previous week, the only other major source of input was the fluctuating price of iron ore, which seems set to fall in the near-future when the G20 summit comes to China and factories close up for the duration.
The Pound was positive against the Australian Dollar over most of the previous week, rising from an initial low of 1.71 to a high on 1.74 around Wednesday.
This movement for Sterling came at a difficult time for forecasters, as against expectations of an immediate post-Referendum crash for the UK economy, signs were that it will be impossible to determine just how much of an impact ‘Brexit’ has had in the near-term.
One particularly alarming forecast came from Pantheon Macroeconomics Chief UK Economist Samuel Tombs, who said;
‘the slight rise in business investment in the second quarter provides little reassurance about the post-referendum outlook, since few businesses anticipated the Leave vote and surveys suggest firms are recoiling from major financial commitments in third quarter. As a result, we continue to see a high risk that the economy enters a mild recession over the coming quarters’.
The week to come will feature a spread of notable Australian and UK economic releases, though the significance of the UK offerings is forecast to be greater..
For Australia, Tuesday will bring positively-predicted building permits results for July, while new home sales results for the same month are due on Wednesday.
Closing off weekly news will be the AIG manufacturing index for August as well as July’s monthly retail sales on Thursday. Manufacturing is expected to fall close to contraction while retail sales have a rise from 0.1% to 0.48% in store.
From the UK, the major events to watch out for will consist of Wednesday’s improvement-predicted GfK consumer confidence result for August, as well as Thursday’s manufacturing PMI for the same month. Along with Friday’s construction PMI, a rise is expected, though not enough in either case for a rise out of contraction to be seen.
The Australian Dollar Pound (AUD GBP) exchange rate has been trending in the region of 0.5794 and the Pound Australian Dollar (GBP AUD) exchange rate has been trending in the region of 1.7254 recently.
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