Aus Dollar, Rand, Canadian & NZ Dollar FX Forecasts: New Banking Laws Threaten AUD, NZD, ZAR + CAD

November 11, 2014 - Written by John Cameron

STORY LINK Aus Dollar, Rand, Canadian & NZ Dollar FX Forecasts: New Banking Laws Threaten AUD, NZD, ZAR + CAD

Currency News UK brings you the Australian Dollar, South African Rand, Canadian & New Zealand Dollar exchange rate forecasts in relation to the Pound Sterling.

European equities have enjoyed a positive start to the weekly session with London’s benchmark FTSE 100 index gaining as much as 0.50% during the morning session.

The euroland’s bourses have also recorded handy gains on the day, with Paris’ Cac 40 trading up by 0.36% a short time ago and Frankfurt’s Dax gaining 0.33% so far.

The latest forex markets look like this today:

The Pound to Aus Dollar exchange rate is +0.02 pct higher with a conversion rate of 1 ">GBP equals 1.83785 AUD.
The Pound to Canadian Dollar exchange rate is +0.2 pct higher with a conversion rate of 1 GBP equals 1.80287 CAD.
The Pound to NZ Dollar exchange rate today is converting -0.1 per cent lower at 2.04378 GBP/NZD.
The Pound to Dollar exchange rate : GBP/USD is converting -0.21 per cent lower at 1.58477.
The Pound to Rand exchange rate (GBP/ZAR) is converting -0.18 per cent lower at 17.85897.

New Banking Laws Help Share Prices

The improvement in risk sentiment has been driven by a keynote announcement from the Financial Stability Board (FSB) – the regulator which is in charge of policing the global banking sector – which confirmed a plan for dealing with retail banks which had previously been considered ‘too big to fail’.

The FSB is chaired by current Bank of England Governor Mark Carney and he didn’t hold back when revealing details of the plan earlier, telling journalists that the new development represented a ‘watershed’ moment.

The plan involves forcing leading banks to hold a higher percentage of their assets as liquid funds in the hope that any future large-scale loss of confidence in banks, akin to that which the sector suffered in 2008, would not necessitate a series of large scale taxpayer-funded bailouts.

AUD NZD ZAR & CAD Exchange Rates Gain Today

The market’s initial knee-jerk reaction to the news has seen the risk-sensitive Commodity Dollars climb against the Pound Sterling (currency:GBP), with the Australian Dollar (currency:AUD) and New Zealand Dollar (currency:NZD) edging higher by 0.21% and 0.31% respectively against the UK unit.

The South African Rand (currency:ZAR) has recorded gains of a similar magnitude against Sterling, while the Canadian Dollar (currency:CAD) has held its ground against the Pound on the day following Friday’s strong gains.

Lack of Liquidity Threatens Economic Recovery

However, these gains are by no means guaranteed to stick when the dust has settled. Bankers have reacted positively to the development, with Anthony Browne of the British Bankers' Association welcoming the news, stating that ‘the banking industry strongly supports this work, which is a really important step in ending 'too big to fail' and ensuring that never again will taxpayers have to step in to bail out banks.’

However, analysts predict that the euroland’s banking sector alone will have to set aside as much as €200bn in order to fulfil the new capital requirements.

These funds will mean less lending to private individuals and businesses, risking a downshift in economic activity in the region which could see AUD, NZD, ZAR and CAD reverse their short-term gains.

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