Pound Australian Dollar Rate Could Go Higher, GBP EUR Rate Up

Published: Friday, 2 November 2012 10:00 BST - Written by David Woodsmith

STORY LINK Pound Australian Dollar Rate Could Go Higher, GBP EUR Rate Up

Last night’s Asian session saw the release of quarterly Producer Price Index numbers for the three months to the end of September. The figure is considered by analysts to be a key leading indicator of future levels of inflation in an economy, so the number was afforded added significance because of next week’s Reserve Bank of Australia policy decision. Expectations were that the data would show a quarter-on-quarter increase of 1.0%, so it came as a surprise when the release showed at 0.6%, suggesting that future levels of inflation in Australia’s domestic economy will remain under control. This may give the RBA leeway to consider a much-muted rate cut at next week’s meeting. The GBP AUD exchange rate has remained steady in the aftermath of the release. However, there appears potential for the Australian tender to weaken as the European session gets underway.

Elsewhere, the safe haven US Dollar has enjoyed pronounced gains during the overnight session, outperforming all of the other sixteen most-actively traded global currencies. This has sent the GBP USD exchange rate down as low as 1.6079 in early trading today. The move in favour of the Greenback comes ahead of this afternoon’s key Non-Farm Payrolls data, which is likely to reveal that a healthy 125,000 new jobs were created in the US economy last month. Investors appear to be shifting into the safety of US T-Bills ahead of the release, in case the figurer disappoints.

This afternoon also sees the release of Canadian labour market data. Anything less than the anticipated 10,000 new jobs created may send the GBP CAD exchange rate back up towards the 1.6200 level. However, as always the main determinant for levels on the Canadian Dollar will be data releases from the US – i.e. this afternoon’s US NFP data is likely to be key.

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