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AUD, NZD Lead the Pack; No Imminent Recovery for CAD (SocGen)

The Australian and New Zealand dollar currencies were way out in front this week on the list of top performing FX majors. The Canadian dollar, meanwhile, continues to suffer from what is now a technical bear market in crude oil. Sterling is again under Brexit-related pressure amid reports of potential UK ministerial resignations.

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Approaching the end of Friday’s European session, a 5-day gain of 0.7 percent for the Australian dollar relative to the US dollar saw it better all comers with the exception of the outstanding New Zealand dollar, which gained 1.7 percent. When last seen at 4:30pm in London, AUD/USD and NZD/USD were trading at respective rates of $0.7241 and $0.6744.

It should be said that gains against the US dollar perhaps mask how well the antipodes are doing. Newfound support for the world’s reserve currency means that the Aussie and kiwi are now settling for half the gains they held 24 hours ago. As measured by the US Dollar Index, the greenback has now eliminated nearly all of its November losses, which isn’t surprising given that we’ve entered what is usually the currency’s strongest period of the year.

Against other majors, the Australian dollar and New Zealand dollar look even better. Consider that AUD/CAD is 1.6 percent higher this week—the Canadian dollar simply can’t catch a break amid the ongoing plunge in the price of oil, which Canada exports in great quantities. Now at a 16-week low of C$1.323 to the US dollar, the Canadian dollar is in need of a shot in the arm, which might come on Sunday should OPEC and Russia agree to oil production cuts for 2019.

“The Canadian dollar still looks cheap but the price of oil . . . counts against it. Frustration will continue and a return to levels below C$1.30 [per US dollar] isn’t imminent,” Société Générale wrote in a note to clients on Thursday.

Back with the Australian dollar, a daily close above $0.7280 is what’s needed to indicate a “mid to long-term bottom,” UOB analysts have said. Since breaking an important technical downtrend on November 1st, the Aussie has tested as high as $0.73 but is yet to close above $0.7273.

For the New Zealand dollar, per UOB, $0.6850 is the line which, if crossed, takes the currency into “its next bullish phase.”

Like the Aussie and kiwi, sterling has thrived of late but it will end the week a long way below Wednesday’s high of $1.3175, at only $1.2983. Britain’s currency faltered on Friday against all of the majors amid reports that Prime Minister May faces ministerial resignations over a Brexit “betrayal.”

 

Further Reading

 

Coronavirus panic drives US dollar strength

Currency rates were extremely volatile last week as the coronavirus situation worsened day by day with various countries implementing ever-tougher measures to stop the spread of the disease.

Last update: 23 Mar, 2020

Coronavirus spread fears linger – USD strong – AUD at 11 year lows

This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.

Last update: 22 Feb, 2020

Coronavirus unnerves currency markets

The strong start to the year for “risk-on” currencies is already a distant memory.

Posted: 3 Feb, 2020

  

Posted to: News

 
 
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

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