Forecasts: Australian Dollar, New Zealand Dollar, Canadian Dollar & Rand Exchange Rate Losses Predicted Following Fed Comments

March 20, 2014 - Written by Toni Johnson

STORY LINK Forecasts: Australian Dollar, New Zealand Dollar, Canadian Dollar & Rand Exchange Rate Losses Predicted Following Fed Comments

The US Dollar (USD exchange rate) received a boost late yesterday following comments from the Federal Reserve Chairwoman Janet Yellen.

The new Head of the Fed was speaking after the announcement by the US central bank that it was cutting its controversial Quantitative Easing programme by a further $10bn per month. The Fed is now committing $55bn per month to the bond purchase scheme – a significant reduction to the monthly $85bn which it allocated to QE throughout 2013.

The move was widely anticipated by Fed watchers, but it was the tone of the commentary which followed from Yellen which took investors by surprise. Yellen has previously suggested that the US central bank was not on a set pathway to phasing out QE, however her press conference yesterday contained an emphatic prediction that asset purchase would be finished by this Autumn, providing the vast American economy performs as per expectations.

Yellen went on to provide further grounds for encouragement for investors holding Dollar-denominated assets when she suggested that the Fed might begin hiking US interest rates six months after the end of QE. The prospect of a US yield hike as soon as Q1 2015 caused market participants to rush back into the Buck, sending the Pound Dollar exchange rate down to as low as 1.6534 just before the end of the North American equities session.

The news from the States caused a sharp shift lower in global equities markets, with New York’s benchmark Dow Jones index closing down by almost three quarters of one percentage point. The attendant move out of risk triggered losses for the Commodity Dollars, sending the Pound Australian Dollar, Pound New Zealand Dollar and Pound Canadian Dollar up to as high as 1.8304 GBP/AUD, 1.9316 GBP/NZD and 1.8589 GBP/CAD respectively. Further losses could be on the cards for these high-yielding currencies and for the South African Rand as today’s session unfurls.

Key Pound Sterling Exchange Rates (Updated 12:30 GMT 20/03/2014)

The Pound Sterling to Australian Dollar exchange rate is trading down -0.07% at 1.82975 GBP/AUD.
The Pound Sterling to Canadian Dollar exchange rate is trading down -0.03% at 1.85836 GBP/CAD.
The Pound Sterling to Euro exchange rate is trading up +0.18% at 1.19852 GBP/EUR.
The Pound Sterling to New Zealand Dollar exchange rate is trading down -0% at 1.93736 GBP/NZD.
The Pound Sterling to US Dollar exchange rate is trading down -0.2% at 1.64998 GBP/USD.
The Pound Sterling to South African Rand exchange rate is trading up +0.41% at 18.05227 GBP/ZAR.

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