Currency bargain-hunters stock up on their Australian dollar holdings; GBP-AUD forecast down to 1.64

 We warned two days ago that the Australian dollar (Currency:AUD) may be looking oversold, and so it has come to pass that currency markets have started picking up a bargain priced Aussie.

The pound to Australian dollar exchange rate is 0.9 pct in the red; GBP-AUD is at 1.6389 at 14:40 in London.
The euro Australian dollar rate is 1.13 pct down at 1.3907.
The Australian dollar versus US dollar exchange rate is 0.93 pct higher at 0.9572.

It is important to be aware that the above quotes are taken from the spot markets; your bank will affix their own spread. However, an independent FX provider will guarantee to beat your bank's offer, thus delivering you more currency. Please find out more here.

"The AUD has fallen nearly 12% in the past two months but the rebound in the currency in the past two days has encouraged some bargain-hunting activity and thoughts that the AUD is oversold and could be poised for a deeper, short-term rebound," says Greg Moore at TD Securities.

Richard Driver at Caxton FX is forecasting a move back to 1.64 for GBP-AUD saying today's decent economic data has aided AUD:

"The Australian economy was given some rare good news last night in the form of labour data which confirmed that total employment rose by 1.1K, well above expectations, while the unemployment rate also declined to 5.5%. A closer look at the data wasn’t quite so positive though, as part-time work rose but full-time employment fell. All in all, the pressure on the AUD has somewhat eased and a move back towards 1.64 (from the current rate of 1.65) is likely in the near-term."

Moore says he believes that for the Australian dollar the outlook depends on the tone of the US data near-term.

"US retail sales are out today and are expected to rebound from soft April levels. Good data for May will encourage more thoughts of Fed tapering and should support the USD. Hopes for a near-term AUD bounce probably hinge more on weak US data we think. For AUD/CAD, we can see some scope for a modest correction higher after the sharp slide in the cross recently but we still rather think rebounds to the low 0.99 area— key medium-term range support that caved in last week," says Moore.

Labour market data was key for today's Australian dollar recovery

Joshua Mahony at Alpari UK talks us through today's Australian labour market data:

"Australia received a much needed boost over night, with the release of key unemployment data. After recent weaknesses in the key commodity currency, along with a tangible slowdown in China, the importance of this release could not be overestimated.

"However, in the key employment change figure, a significant drop was lessened somewhat but avoiding an expected negative figure. The figure fell from 45k to 1.1k, yet this represents an improvement of almost 10,000 workers from the market expectation of -9.8k.

"Also, in an unexpected move, the headline rate of unemployment fell from a revised figure of 5.6% to 5.5%. Unfortunately despite the initial boost seen in the markets, the AUD has since pared much of its gains."