GBP/AUD and USD/AUD Exchange Rates Trend Lower after RBA Statement
Australian Dollar Weakens after PMI Reports
Following the publication of Services PMI for both China and Australia, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate advanced. The US Dollar to Australian Dollar (USD/AUD) exchange rate also rallied as the ‘Aussie’ posted widespread losses.
If you're looking to make an international money transfer, we recommend TorFX.
The Australian Dollar came under extensive pressure as the AiG Performance of Services index showed that the sector eased further into contraction territory in October.
The index dropped from 45.4 to 43.6.
China’s Services PMI also edged lower last month, although it managed to hold above the 50 mark separating growth from contraction.
The index drifted from 52.3 in September to 51.7 in October, with the rate of new order growth sliding to a five-month low.
HSBC economist Hongbin Qu said this of the result; ‘Both new and outstanding business improved, although the latter remained in contraction. Price pressures diverged as input prices continued to rise while output prices saw a marginal reduction. The employment index remained in stable expansion […] we still expect further easing measures in the coming months to help offset the downward pressures on the economy.’
GBP/AUD up 0.6%
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate climbed by more than 0.6% over the course of the European session in spite of the UK’s own disappointing UK Services PMI.
The unexpectedly steep decline in the measure of the UK’s services sector further reduced the odds of the Bank of England introducing an interest rate increase in the near future.
According to Markit economist Chris Williamson; ‘After GDP growth slowed to 0.7% in the third quarter, a 0.5% expansion is currently being signalled by the surveys for the fourth quarter. However, with inflows of work rising across all three sectors at the slowest rate for 16 months, there is a risk that economic growth could weaken further.’
USD/AUD Movement Forecast
The Australian Dollar was trending lower against the US Dollar ahead of the publication of several influential economic reports for the US.
The ‘Greenback’ was deriving support from the midterm election results and the USD/AUD exchange rate hit a high of 1.1616.
Australian Dollar (AUD) Registers Broad-Based Declines
Before the close of European trading the Australian Dollar (AUD) fell across the board as investors fled from commodity-driven assets in the wake of another slide in oil prices.
The 0.7% decline in Brent crude oil futures spooked the market and both the Canadian Dollar and New Zealand Dollar also registered losses.
Iron ore, Australia’s main export, also fell to an over five-year low.
Australia’s upcoming employment figures could lend the Australian Dollar some support if the nation is shown to have added positions. However, given the recent unreliability in Australia’s employment stats, the data might not have much impact on the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate.
AUD Bolstered by Employment Gain
The news that full-time employment in Australia increased by 33,400 in October saw the Australian Dollar edge higher against the Pound (AUD/GBP) and US Dollar (AUD/USD).
The Australian unemployment rate held at a four-year low of 6.2%.
Before the weekend additional Pound Sterling to Australian Dollar exchange rate movement could be caused by the Bank of England’s interest rate decision and the Reserve Bank of Australia’s Monetary Policy Statement.
RBA Will Maintain Policy for a Sustained Period
The Reserve Bank of Australia delivered its monetary policy statement during the Australasian session and bolstered the local currency in the process. The central bank asserted that fiscal policy would remain accommodative and that the measures currently in place will be enough to bolster growth in the long term.
The fact that the central bank has no intention of altering interest rates in the near term helped the ‘Aussie’ strengthen and both the Pound Sterling to Australian Dollar (GBP/AUD) and US Dollar to Australian Dollar (USD/AUD) exchange rates declined overnight.
Even a sharp slowing in the pace of growth in Australia’s construction sector wasn’t enough to restrain the Australian Dollar. News from the UK and US could trigger further movement in the hours ahead.