Australian Dollar Article List

The British pound versus Australian dollar exchange rate is 0.25 pct in the red at 1.554. The Australian dollar to US dollar rate is 0.35 pct higher at 0.9766.

[NB: The above quotes are taken from the interbank markets - your bank will affix a discretionary spread to the retail rate they offer. However, an independent provider will guarantee to undercut your bank's offer, thus delivering more currency. Please find out more here.]

Basis for Australian dollar advance unconvincing

The Australian dollar, and New Zealand dollar by extension, were certainly the dogs on the currency markets last week. Today's return to strength for both AUD and NZD should serve to remind us that counting on further weakness was likely to be futile.

"AUD suffered the most last week from the broad USD strength. However, we think the basis of the move isn’t particularly strong, and could see a partial reversal of the recent moves should Bernanke’s speech on Wednesday re-adjust market perceptions of Fed “tapering”. The RBA minutes released early tomorrow morning will be of interest," says Lloyds Bank.


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According to Lloyds the market will be looking closely for indications of further cuts with the market pricing another 25bp cut by year-end. However, we doubt they will give too much away on further monetary policy action, after announcing a 25bp cut earlier this month and could provide some support for AUD/USD.

Richard Driver at Caxton FX hints that gains in the AUD are likely related to profit taking:

"The RBA will release the minutes from its most recent meeting this evening, where the bank actually cut interest rates. The minutes should shed some light over where the bank stands on a further interest rate cut. Another cut by the end of Q3 is looking highly likely from our standpoint.

"GBP/AUD trades just below 1.56 this morning and we may see further profit-taking weigh on this pair for now."

New Zealand dollar higher but further declines likely

The New Zealand dollar (Currency:NZD) is also higher today with GBP/NZD 0.7 pct in the red at 1.8681. The NZD/USD rate is 0.86 pct higher at 0.8135.

Driver says near-term favours the NZD while the broader market environment is likely to prove a hinderance:

"You can tell by this pair’s recent decline that investors are wary of a dovish testimony from Bernanke.

"Much of the weakness in the commodity currencies this month has been about bets that the Fed will taper off QE3. The NZD strengthened over the weekend as the market turned its sights towards Wednesday night’s testimony from Fed Chairman Bernanke, as there remains a prominent risk of a dovish bias.

"This pair is off its highs towards 1.90 and currently trades at 1.87, with further modest declines likely."