Renewed Gains Forecast for Pound Sterling (GBP) vs AUS NZD CAD

January 14, 2016 - Written by James Fuller

STORY LINK Renewed Gains Forecast for Pound Sterling (GBP) vs AUS NZD CAD

Commodity Currencies, AUD, NZD, CAD Recover on Chinese Trade Data

The high yielding Commodity Dollars enjoyed a boost during early trading yesterday following the publication of a rare set of encouraging data from the world’s second largest economy. Chinese trade numbers are always a closely monitored data release and the latest version, published during the overnight session, were even more hotly anticipated than normal given the heavy losses sustained by China’s leading stock exchanges since the turn of the year.

Are the Australian Dollar, New Zealand Dollar and Canadian Dollar Forecast for more Volatility on Chinese Concerns?

The Australian Dollar (currency : AUD), New Zealand Dollar (currency : NZD) and Canadian Dollar (currency : CAD) remain heavily dependent on China as a source of demand for their economy’s plentiful natural resources. Investors holding assets denominated in AUD, NZD and CAD therefore feared the worst for the December edition of China’s trade numbers, with the consensus amongst analysts being that they would point to a year-on-year drop in the level of Yuan-denominated imports into China of some 7.9%. When the official figures showed an annualised decrease of just 4.0%, the Commodity Dollars came in for sustained support in the market.

The numbers also showed a surprise year-on-year increase in the level of shipments out of China of 2.3% when analysts had been predicting a fall. The news of the first increase in the level of exports out of the world’s second largest economy since the start of last Summer gave hope that global demand for China’s plentiful exports is now beginning to pick up.

Pound Sterling Exchange Rate Predictions: GBP Could Gain on Risk Aversion

However, the improvement for AUD, NZD and CAD during the first half of the European equities session proved to be a false dawn and when trading got under way in New York the mood amongst investors turned firmly ‘risk-off’. A dip below the psychologically significant $30 a barrel level for global oil prices helped to fuel investors’ jitters and the flight to safety which followed sent the VIX ‘Fear Index’ spiking to above the 25.00 level. Further near-term gains are forecast for the Pound Sterling against the Commodity Dollars if this shift out of risk gains momentum.

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TAGS: Forecasts