World Share Markets Tumble: AUD, NZD, ZAR Forecast Falls

February 11, 2016 - Written by David Woodsmith

STORY LINK World Share Markets Tumble: AUD, NZD, ZAR Forecast Falls

Dramatic Currency Market Exchange Rate Movement Seen Today

Today’s session has brought dramatic movement in the global equities and currency markets, with banks and financial institutions hit particularly hard, as evidenced by the sharp shift higher in the value of the VIX ‘Fear Index’. VIX ended yesterday’s session at 26.29, but within minutes of this afternoon’s Wall Street opening bell, it had touched 29.26, its highest level for three weeks as traders hit the panic button.

Federal Reserve Chairwoman Janet Yellen Sends US Dollar Exchange Rate Reeling

The shift out of risk laden assets came as US Federal Reserve Chair Janet Yellen continued to give testimony to American lawmakers on Capitol Hill, citing worsening global conditions. The Fed Chief struck a downbeat tone when she stated that,

‘We felt in December the economy was moving up and inflation would go up. A lot has gone on since then. We are in the process of assessing how those developments affect our outlook. We will meet in March and have a new set of projections. I’ve not thought that a downturn sufficient to make the next move a cut was a likely possibility. Not seen a shift in economic outlook to make that likely.’

Is Pound Sterling Forecast to Gain on AUD, NZD, ZAR Exchange Rates?

These comments paint a bleak picture regarding the prospects for a continuation of the global financial recovery. If levels of nervousness amongst market participants continue to increase, then analysts forecast that the Pound Sterling (currency : GBP) may record renewed gains against the export-driven Australian Dollar (currency : AUD), New Zealand Dollar (currency : NZD) and South African Rand (currency : ZAR).

Yellen’s words did however hold out some hope for oil-driven tenders including the Norwegian Krone (currency : NOK). The Fed Chair stated that, ‘energy prices have continued to move down, eventually they will stabilise. When that happens and the dollar stabilises, inflation will begin to move up but it’s difficult to predict when.’ The prospect of a fresh shift higher in the price of ‘Black Gold’ could send the Pound Sterling Norwegian Krone exchange rate lower once more.

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