Pound to Australian / Canadian / New Zealand Dollar Exchange Rates Forecast Losses as Commodity Prices Rally

Modified: Friday, 28 February 2014 10:36 BST - Written by John Cameron

STORY LINK Pound to Australian / Canadian / New Zealand Dollar Exchange Rates Forecast Losses as Commodity Prices Rally

Global commodities prices have been locked in a pronounced downtrend since Q2 2011. At this time, the broad-ranging Dow Jones UBS Commodities Index, (DJUBS:DJI), which is quoted in New York, was tipping the scales at just above the 170.00 threshold but has been on the slide ever since.

By Christmas 2013, the closely-monitored gauge of worldwide input prices had slumped to its lowest level for almost four years and export-driven commodity currencies had mirrored its downward move. This caused the Pound Australian Dollar exchange rate to jump to above the 1.9000 level GBP/AUD for the first time in four and a half years, while the Pound New Zealand Dollar exchange rate had improved to above the two to one threshold GBP/NZD. GBP AUD and GBP NZD had been trading in the 1.4000s and 1.7000s respectively less than a year earlier.

However, the market move against the Commodity Dollars appears to have hit the buffers in the two months since the turn of the year and the renewed bout of selling pressure on GBP AUD and GBP NZD has coincided with an improvement in the Dow Jones UBS Commodities Index. DJUBS:DJI improved from close to the 120.00 level to back up to above 130.00 once more during the past eight weeks. Yesterday’s session saw the index trade up to as high as 133.96 by the middle part of the US equities session.

It would appear likely that if the price of raw materials continues to improve, then the GBP AUD and GBP NZD exchange rates, alongside the Pound Canadian Dollar rate, may continue to retrace GBP/CAD.

However, the recent uptick in wholesale commodities prices could be placed in jeopardy following comments from US Federal Reserve policymakers and a rise in US Retail Sales, on Tuesday, which suggested that the Fed’s tapering of Quantitative Easing may be set to continue apace. Gold registered an intraday loss in response to the developments and the possibility exists that this may be a portent of things to come.

Key Pound Sterling, Australian Dollar, NZ Dollar & Canadian Dollar Exchange Rates (Updated: 11:00 GMT 27/02/2014)

The Pound Sterling to Australian Dollar exchange rate is trading up +0.24% at 1.86386 GBP/AUD.
The Pound Sterling to Canadian Dollar exchange rate is trading down -0.25% at 1.85155 GBP/CAD.
The Pound Sterling to New Zealand Dollar exchange rate is trading down -0.64% at 1.99300 GBP/NZD.
The Canadian Dollar to Australian Dollar exchange rate is trading up +0.49% at 1.00665 CAD/AUD.

The Canadian Dollar to Pound Sterling exchange rate is trading up +0.25% at 0.54009 CAD/GBP.
The Canadian Dollar to New Zealand Dollar exchange rate is trading down -0.39% at 1.07640 CAD/NZD.
The Australian Dollar to Canadian Dollar exchange rate is trading down -0.49% at 0.99340 AUD/CAD.
The Australian Dollar to Pound Sterling exchange rate is trading down -0.24% at 0.53652 AUD/GBP.
The Australian Dollar to New Zealand Dollar exchange rate is trading down -0.88% at 1.06929 AUD/NZD.

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