The Australian Dollar (AUD) has advanced moderately against rival currencies today after the Chinese government stepped in to stabilise the volatile Chinese stock market.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate gained today after the China Securities Regulatory Commission (CSRC) announced its decision to stabilise the chaotic Chinese stock market by buying stocks. Zhang Xiaojun, a spokesperson for the Commission, said that the CSRC’s goal is to ‘continue to stabilize the market, to reassure public confidence [and] to safeguard against systemic risks’.
The news has restored hope that China will renew its demand for Australia’s mining exports, which could come from a stabilised Chinese economy. This has meant a healthy gain for the Australian Dollar over its competitors; the ‘Aussie’ rose by over 0.4% against the Pound Sterling (AUD/GBP) and the US Dollar (AUD/USD) today, but saw an even greater gain against the Euro (AUD/EUR), rising by 1% as the common currency reeled following the revelation of former Greek Finance Minister Yanis Varoufakis’ ‘Drachma Plan’.
Although the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has declined today by -0.3%, the Pound rallied elsewhere against the Russian Ruble (GBP/RUB) and the Swedish Krona (GBP/SEK) by 1%. As with the ‘Aussie’, the Pound also rose against the Euro (GBP/EUR) by 0.7%; this overall rise is likely due to the UK’s quarterly Q2 GDP rising by the forecast 0.7%, which has strengthened the Pound against its competitors.
The Pound Sterling also saw losses against the commodity currencies today, with a drop of over -0.2% against the South African Rand (GBP/ZAR) and the Australian Dollar (GBP/AUD).
Although the apparent stabilisation of the Chinese economy can only be beneficial to the ‘Aussie’ (AUD), the Pound Sterling (GBP) also has several impending announcements which may improve its prospects in the GBP/AUD pairing; these include June’s Net Consumer Credit and Mortgage Approvals figures, both of which have been forecast to increase slightly.
However, the Australian month-on-month (MoM) and year-on-year (YoY) Building Approval figures are also due this week, and if they show the predicted 19.5% increase, this could be a sign of an economic recovery for Australia, which would strengthen the Aussie’s performance against the other major currencies, at least for the time being.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate was trending in the region of 0.4691 and the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending in the region of 2.1326 today.
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