Shares and Oil Slump, Pound Sterling (GBP) Jumps vs Australian Dollar (AUD), Canadian Dollar (CAD)

August 21, 2015 - Written by John Cameron

STORY LINK Shares and Oil Slump, Pound Sterling (GBP) Jumps vs Australian Dollar (AUD), Canadian Dollar (CAD)

Risk-Off Environment Sees Australian Dollar, New Zealand Dollar Exchange Rates Fall

The near-term collapse in global equities markets has continued apace during this afternoon’s session, with the benchmark Chicago-based S&P 500 Index dropping below the psychologically significant 2000 level for the first time since 2nd February a short time ago. London’s headline FTSE 100 index of large cap corporations slumped by a massive 2.54% and has just finished trading for the week at a lowly 6,206 points – its lowest closing level since just before Christmas of last year.

GBP-AUD Peaked at Best Rate of 2.1524 Today

The heavily risk-off trading environment on the day has been confirmed by a sharp spike in the closely-watched VIX ‘Fear Index’ which measures the level of protective ‘put’ orders placed by US equities traders on the deals which they strike. By the middle stages of the North American trading day, VIX had spiked by over 25% to break through the 22.5 barrier. In the currency markets, support for the Commodity Dollars has remained anaemic as investors flock for safe haven assets. The Pound Sterling (currency : GBP) jumped to within 4 pips of a fresh 6 ½ year high against the Australian Dollar (currency : AUD) during pre-trade in Europe; GBP AUD peaked at 2.1524 before pulling back and with the subsequent flight to safety, many analysts forecast that the Pound Sterling Aussie exchange rate is highly likely to break to a fresh multi-year high when the global currency markets re-open for business next week.

Currency Market Forecast: Pound Gains on Canadian Dollar Exchange Rate, Oil Prices Down

Elsewhere, the Pound has also fared well against the Canadian Dollar (currency : CAD), which continues to suffer from the weakening of oil prices since the turn of the year. The price of a barrel of Brent Crude lost another 2.6% of its value on the day today and now fetches a lowly $45.42 on the global markets.

The renewed downward movement in global commodity prices and for the export-driven Commodity Dollars has been precipitated by last night’s economic statistics out of China which revealed that activity levels in the manufacturing sector of Asia’s second largest economy contracted at their fastest rate in over six years last month. It appears highly unlikely that the shift out of risk is finished just yet.

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TAGS: Australian Dollar Forecasts Currency Predictions Daily Cur Forecasts