Pound Predicted to Bounce Back Against Australian and New Zealand Dollars: GBP-AUD at 1.7 Again?

The Australian Dollar (Currency:AUD) is struggling once more confirming to us that Chinese data alone is not enough to save the AUD from a prolonged downturn.

• The Pound Sterling to Australian Dollar exchange rate is 0.14 pct up on a day-to-day basis at 1.6924.
• The Euro to Australian Dollar exchange rate is 0.18 pct higher at 1.4566.
• The Australian Dollar to US Dollar exchange rate is 0.11 pct in the red at 0.9138.

Be Aware: The above quotes are taken from the wholesale spot markets; your bank will affix their own discretionary spread to the figures when passing on their retail offer. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here.

The Pound Sterling continues to creep higher against the Australian dollar, helped by weaker Australian confidence data.

"The latest Australian budget update has revealed the aussie government is noting significant downside risks to the aussie labour market outlook. On top of this, a gauge of aussie business confidence dipped to a seven month low, which again contributed to a weaker overnight session for the AUD," says Richard Driver at Caxton FX.

GBP/AUD has bounced off the 1.68 area and appears ripe for another visit to the 1.70 benchmark.

AUD/USD direction hinges on today's retail sales data

Kathy Lien at BK Asset Management points out that the next 24 hours will see the Australian currency driven by external factors:  

"The Australian, New Zealand and Canadian dollars sold off against the greenback yesterday giving up a small part of last week's gains.

"No economic data was released from the 3 commodity producing countries and the currencies failed to benefit from the rise in gold prices leaving U.S. dollar strength and Fed tapering as the primary catalysts for the move lower.  

"This is a quiet week in general for the commodity producing countries.  According to the latest CFTC IMM data released on Friday, speculative short positions in the AUD/USD remain near record highs.

"Since this data measures positioning as of last Tuesday, we suspect there are fewer short positions now with the currency pair up nearly 400 pips from its lows.  While a move to its 7 week range high of 0.9345 is possible, in order for more shorts to be shaken out, we need a significantly weaker U.S. retail sales report to drive the dollar lower because there is very little market moving Australian data on the calendar."

New Zealand dollar hit by decline in house prices

Turning to the New Zealand dollar (Currency:NZD) we see the Kiwi was hit by a decline in house prices and slower increase in food prices:

• The Pound Sterling to New Zealand Dollar exchange rate is 0.17 pct higher on a daily basis at 1.9340.
• The Euro to New Zealand Dollar exchange rate is 0.26 pct higher at 1.6650.
• The New Zealand Dollar to US Dollar exchange rate is 0.2 pct lower at 0.7998.

Be Aware: The above quotes are taken from the wholesale spot markets; your bank will affix their own discretionary spread to the figures when passing on their retail offer. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here.

Meanwhile the New Zealand dollar was hit .  Australian business confidence is the only piece of data scheduled for release over the next 24 hours.

"The kiwi dollar is struggling a little as a result of the Fonterra contamination issue. It has by no means been a sell-off for the NZD in the wake of last week’s Fonterra contamination scare but the fall-out, which has included public criticism from China, has kept the NZD under pressure. The success of Fonterra is absolutely crucial to NZ growth but NZD has survived similar mishaps in the past," says Driver.

This evening brings a key quarterly NZ retail sales update which is set to impress and could trigger another move south from the current level of 1.9330.