Exchange Rates: Australian Dollar (AUD), New Zealand Dollar (NZD) & Canadian Dollar (CAD) Fall on China Economy Fears

Modified: Thursday, 2 January 2014 13:16 BST - Written by John Cameron

STORY LINK Exchange Rates: Australian Dollar (AUD), New Zealand Dollar (NZD) & Canadian Dollar (CAD) Fall on China Economy Fears

Thin trading volumes during the Festive period have not stopped significant moves taking place in the global currency markets as investors priced-in a significant development from the world’s second largest economy.

Statistics coming out of China are often viewed with cynicism by Western commentators who still consider them to be a not entirely unbiased snapshot of economic conditions in the former Communist state. Given the stream of ‘good news stories’ emanating from Asia’s leading economic superpower in recent years, this was perhaps understandable. However, now that the rise in activity appears to be levelling off in China’s economy, market whispers regarding unreliable Chinese data sets appear to be dying down.

This was certainly the case following Monday’s publication of an official report from China’s National Audit Office which revealed that the overall level of local government debt during 2013 had spiralled by a dizzying 70% compared to three years earlier. Local level borrowing shot up to a shocking $2.9tn last year, leading analysts to surmise that China is severely overstretching itself and will need to reign in public spending and increase taxation in order to manage growth in its burgeoning economy.

Pound Sterling to NZ Dollar Exchange Rate Spiralls to Above 2.0200 GBP/NZD

The mere thought of an enforced dampening of economic activity by China’s policymakers has weighed heavily on the high-yielding Commodity Dollars this week, sending the Pound to Australian Dollar exchange rate (GBP/AUD) up to close to the 1.8700 level during yesterday’s session. The Pound to New Zealand Dollar exchange rate (GBP/NZD) meanwhile, has spiralled to above the 2.0200 level as investors shift out of Kiwi-denominated assets thanks to renewed fears that New Zealand’s number one export market may be set for tough times during 2014. GBP CAD continues to fare well for similar reasons and the Pound to Canadian Dollar exchange rate begins 2014 trading close to the 1.7600 threshold.

Elsewhere, Tuesday afternoon’s stronger than anticipated US Consumer Confidence survey for December wasn’t enough to see the Greenback claw back any of its recent losses against Sterling, meaning that the Pound to US Dollar exchange rate (GBP/USD) began the year firmly on the front foot. A strong ISM Manufacturing survey result for last month will be needed later today to shift Cable Southwards once more, but the investors waiting a concerted move downwards for GBP USD are likely to have to wait fro the next cut to Quantitative Easing from the Federal Reserve.

Important Australian/New Zealand/Canadian Dollar Exchange Rates Today (10:15 GMT 02/01/2013)

The British Pound Sterling to Australian Dollar exchange rate is trading down -0.21% at 1.86025 GBP/AUD.
The British Pound Sterling to Canadian Dollar exchange rate is trading down -0.33% at 1.75897 GBP/CAD.

The British Pound Sterling to New Zealand Dollar exchange rate is trading up +0.01% at 2.02002 GBP/NZD.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Australian Dollar Forecasts Canadian Dolla Forecasts