GBP AUD And GBP NZD Rates Threaten New Multi-Decade Lows Following Strong US Consumer Confidence Survey

Published: Wednesday, 27 February 2013 09:00 BST - Written by John Cameron

STORY LINK GBP AUD And GBP NZD Rates Threaten New Multi-Decade Lows Following Strong US Consumer Confidence Survey

A strong showing from the latest US Consumer Confidence survey, released during the middle part of yesterday afternoon’s European equities session, helped take the edge off the prevalent ‘risk off’ trading environment which the non-result in Italy’s weekend general election had engendered. The February gauge of optimism amongst economic participants in the world’s leading economy showed a sharp increase to 69.6 from January’s print of 58.4. Significantly, this level was the highest reading for the closely-watched survey since last November, at which time fears began to emerge that, in the absence of a workable debt deal, the vast American economy might be about to plunge over a damaging ‘Fiscal Cliff’. US consumers now appear to have put these concerns firmly to the back of their collective minds.

Investor sentiment regarding the prospects for the US economy now appears to be firming, with many analysts pointing to last Wednesday’s Federal Reserve minutes as evidence that the world’s premier economy has turned a corner. The memos of the US central bank’s most recent policy discussion revealed that the nation’s policymakers were seriously considering winding down the US’s controversial Quantitative Easing programme thanks to the improved tone of recent US economic data releases.

Appetite for risk had been in short supply in the early part of yesterday’s session as investors continued to fret about who might be running the Italian economy once the dust settled after the polls closed in Italy on Monday afternoon. The news of an indecisive result caused Asian shares indices to lose over 2% of their value on Tuesday. However, yesterday’s positive US Consumer Confidence survey could see Monday’s flight to quality reversed as the week progresses. Such an outcome could see the GBP USD exchange rate climb back up towards the mid-150s once more, whilst the risk-sensitive AUD and NZD exchange rates may gain new ground, causing the GBP AUD and GBP NZD exchange rates to tumble to fresh multi-decade lows.

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