Australian Dollar (AUD) & New Zealand Dollar (NZD) Exchange Rate Forecast to Climb

July 18, 2014 - Written by John Cameron

STORY LINK Australian Dollar (AUD) & New Zealand Dollar (NZD) Exchange Rate Forecast to Climb

Currency News UK brings you the Pound to Australian Dollar (AUD) and New Zealand Dollar (NZD) Exchange Rate Forecasts - Risk was already off the menu when yesterday’s session got underway as far as institutional investors were concerned, thanks to Wednesday’s announcement of firmer sanctions on Russia by the US and the eurozone. However, global appetite for risk ebbed further as the day progressed thanks to a brace of independent and unexpected events.

The main event came during late trading in the European markets as news emerged that a Malaysian Airlines 777 airliner had apparently been shot down over Eastern Ukraine with the loss of all 295 passengers and crew on board. The jet was about to enter Russian airspace and was travelling at an altitude of over 6 miles high. Defence experts suggest that the attackers would have had to use a long range surface to air missile which would probably have required laser guidance in order to shoot down the plane.

The action was described by Ukraine’s President as an ‘act of terrorism’ as rebel leaders denied any involvement. Separatists in the same area of Ukraine have reportedly shot down two government fighter planes this week already, leading most analysts to lay the blame for the incident firmly at their feet. The situation in Ukraine had ostensibly reached a crescendo some two months ago, with Russian forces flexing their muscles on the nation’s border with Russia. A civil war appeared imminent at this time, but the intervening weeks have seen a defusing of tensions. Yesterday’s event threatens to escalate the situation once again, re-establishing the tense stand-off between Russia and her Western counterparts which was prevalent earlier in the year. Expect a wide scale shift out of risk in such a circumstance.

Elsewhere, news from one of the emerging BRIC nations during late trading yesterday also hit global risk sentiment. Analysts had been expecting the June job creation figures to reveal that some 82,000 new positions had been added to Brazil’s payroll last month. When the figure printed at 25,363, the shock amongst investors was palpable. Brazil’s Labour Minister Dias described the figures as ‘unexpected’ and ‘weak’, adding to the likely downside effect on investor sentiment.

The market reaction to these developments was marked. The VIX index of fear climbed by some 16.5% on the day to tip the scales at 12.8 and the short term version of the VIX climbed an even greater 28% to 13.2. The figures do not bode well for the near-term prospects for the Australian and New Zealand Dollars (currency:AUD) and (currency:NZD). If the ‘risk-off’ trading environment prevails today, then expect the Pound Sterling Aussie exchange rate (GBP/AUD) and the Pound Sterling Kiwi exchange rate (GBP/NZD) to climb.

Latest Aus and NZ Dollar Exchange Rates Today - 20/07/2014

The Pound Sterling to Australian Dollar exchange rate is 1.81878 GBP/AUD.
The Pound Sterling to New Zealand Dollar exchange rate is 1.96547 GBP/NZD.
The Euro to Australian Dollar exchange rate is 1.43972 EUR/AUD.
The Euro to New Zealand Dollar exchange rate is 1.55583 EUR/NZD.
The Australian Dollar to New Zealand Dollar exchange rate is 1.08065 AUD/NZD.

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