Australian dollar hammered by pound sterling, Forecasters see further losses for GBP/AUD and other Aus dollar crosses
- Written by: Gary Howes
Analysts forecast further Australian dollar weakness ahead as jitters over the state of the Asian economy provide a fresh drag on sentiment towards Australia.
News of the potential default of a large Chinese trust product, which circulated through branches of China’s biggest bank, has added to worries regarding the Chinese economy and its shadow banking system.
China’s bank regulator has instructed offices to increase scrutiny of credit risks in the coal industry and this has further weakened the Australian dollar today.
In addition, the RBA has said that it believed the AUD/USD cross should be closer to 0.85. The net result is an under pressure Aus dollar:
Aus dollar exchange rates today
- The pound sterling to Australian dollar exchange rate (GBP/AUD) is trading 0.95 pct higher at 1.9158.
- The euro to Australian dollar exchange rate (EUR/AUD) is 0.88 pct higher at 1.5761.
- The Australian dollar to US dollar rate (AUD/USD) is 1.05 pct lower at 0.8676.
- The Aus dollar to New Zealand dollar (AUD/NZD) is now 0.33 pct lower at 1.0530.
Note: Our AUD quotes are taken from the wholesale spot markets. Your bank will charge a spread at their discretion when passing on a retail rate. However, an independent FX provider is so well placed on the market that they are able to deliver you up to 5% more currency. Please learn more here.
Australian dollar exchange rate action over the past 24 hours
The Aus dollar dropped below 87 cents vs. USD for the first time since July 2010 after Chinese bank regulator called for increased caution regarding the credit risk in the coal-mining industry.
China’s banking regulator ordered its regional offices to increase scrutiny of credit risks in the coal-mining industry and to monitor risks from trust and wealth-management products, said two people with knowledge of the matter.
Economic growth and industrial production in the nation weakened and manufacturing may shrink this month, data showed this week.
The AUD/USD pairing fell to 0.8689 in the wake of the news, a move that pressured the broader Aus dollar complex.
Australian dollar / Pound Stering exchange rate forecasts
RBA board member Heather Ridout claimed that a rate of I USD to U$0.80 AUD would be a “fair deal” for the economy, and this has also encouraged Aussie weakness.
The rate is currently trading above 1.9120 and analysts expect levels in GBP/AUD will remain elevated.
GBP has held firm after some decent domestic releases and the general weaker USD tone helped GBP/USD higher yesterday making a new year high.
Today, the BoE Governor Carney speech at mid-day will attract some interest.
"However, we expect his comments to be broadly in line with the recent rhetoric from the MPC. He will likely reiterate that there is ‘no immediate need to raise Bank Rate even if the 7% unemployment threshold were to be reached’ and that when the Bank did raise rates it would only be done gradually, as seen in the latest MPC minutes and reiterated in both BoE McCafferty and Fisher’s speeches this week," say Lloyds Bank Research.
"It seems sterling will remain in control despite speculation surrounding the Fed’s tapering plan. We maintain our view that these levels cannot be sustained and therefore expect some sterling weakness on the back of governor Carney’s speech," says Sasha Nugent at Caxton FX.
Forecasts for the major AUS dollar exchange rate crosses today
"AUDUSD fell to 0.8689. Offers are seen at 0.8775/85 area, while stops are seen above 0.8800. AUDNZD eased to fresh low of 1.0518; the sentiment is negative. The next targets are placed at 1.0500 (psychological level) then 1.0432 (2005 low)." - Swissquote Research.
"The overall weight of global/domestic news flow has conspired to weigh on the AUD-USD and if the pair completely loses its foothold on the 0.8800 handle, 0.8575 may beckon multi-session. To this end, we are also turning slightly more inclined towards further downside risks for the pair." -OCBC Bank.
"Options traders may consider constructing a Bear Put Spread on AUDUSD and benefit from a possible continuation of the bearish trend." - Orestis Aristides at Easy Forex.
UBS say, "the pair posted a new low yesterday reinforcing the bearish picture. Support is at 0.8545, a break below which would extend the downtrend
to 0.8067. Resistance is at 0.8888."
