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.

Email share     Facebook     LinkedIn    Twitter

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


New Year Optimism Retreats on US/Iran Tension

The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.

Last update: 8 Jan, 2020

Disruptors Challenging Australian Banks in Forex Price and Service: ACCC Report

Key Takeaways from the ACCC inquiry into currency conversion services. BestExchangeRates referenced among comparison sites playing an important role in customer awareness of the excessive currency margins charged by banks.

Last update: 11 Dec, 2019

AUD/GBP Between a Rock and a Hard Place – USD Strength


Both the Australian dollar and British pound sterling have had a hard time of late caught between the rock of the China/US trade war and the Brexit hard place.

Last update: 7 Jan, 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.

Get a Better FX Deal when you Send and Spend Abroad.


Do NOT follow this link or you will be banned from the site!