Poor Chinese Data Forecast to Push Pound Sterling Higher Versus AUD NZD CAD

April 13, 2015 - Written by John Cameron

STORY LINK Poor Chinese Data Forecast to Push Pound Sterling Higher Versus AUD NZD CAD

The high-yielding Commodity Dollars have been the big losers in the global currency markets so far today, with the Pound Sterling (currency:GBP) recording strong gains against the Australian Dollar (currency:AUD), New Zealand Dollar (currency:NZD) and the Canadian Dollar (currency:CAD).

The forward move for Sterling against these high-yielders has been driven by weekend data which revealed that, against expectations, the level of Chinese imports had experienced their sharpest monthly fall since the 2008 / 09 global financial crisis. The news came as a heavy blow to the Australian and New Zealand economies in particular thanks to their heavy dependence upon exports of raw materials to China for their continued economic well-being. Analysts believe that, although the evidence of a dampening of domestic demand in China may be bad for AUD NZD and CAD, domestic share markets, and global appetite for risk, may be set to benefit. Satoshi Okagawa of Sumitomo Mitsui Banking certainly agreed, stating earlier that, ‘in a situation like this, China will clearly have to ease monetary policy (further) and that is positive for equities.’

Further pressure was heaped upon the Commodity Dollars during early trading this week as concerns increased regarding another major market for Australian New Zealand and Canadian exports of raw materials. The euro (currency:EUR) gave up ground against the other sixteen most actively traded global currencies following a weekend report in a German newspaper which described the eurogroup of Finance Ministers as being ‘shocked’ at Greece’s pointed failure to present a list of structural reforms at last week’s official discussions which were held in Brussels. Greece is embounded to provide a full plan for economic reform at its April 24th meeting with the eurogroup. A failure to come up with an acceptable way forward at this meeting would hit the single currency hard, potentially sending the euro US Dollar exchange rate down to parity for the first time in over a decade. Analysts forecast that the attendant drop in risk appetite would also serve to send the Pound Sterling higher once more against the Australian Dollar, New Zealand Dollar and the Canadian Dollar.

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