Forecast for Pound to Aus Dollar & NZ Dollar Improves - Shares Slump and VIX Spikes

Modified: Wednesday, 10 December 2014 00:08 BST - Written by John Cameron

STORY LINK Forecast for Pound to Aus Dollar & NZ Dollar Improves - Shares Slump and VIX Spikes

Pound Sterling to Australian Dollar and New Zealand Dollar Exchange Rate Forecasts

A rout in emerging markets equities has marked today’s session in the global currency markets.

The BRIC nations (Brazil, Russia, India, China) have taken a hit during the past 24hrs; Sao Paulo’s benchmark Bovespa share index plunged by 3.31% during overnight trading, while Moscow’s MICEX gave up almost as much, dropping by 3.13% on the day.

Bombay’s headline Sensex equities index lost a slightly less alarming 1.15%, while global traders turned their backs on Chinese shares in a big way during last night’s Asian session, sending the Shanghai SSE Composite lower by a massive 5.43%.

The Pound to Australian Dollar exchange rate today is converting +0.05 per cent higher at 1.89113 GBP/AUD.
The Pound to Canadian Dollar exchange rate is 1 GBP equals 1.79461 CAD.
The Pound to New Zealand Dollar conversion rate is +0.06 pct higher at 2.04041 GBP/NZD.
The Pound to US Dollar exchange rate today is converting -0.02 per cent lower at 1.56823 GBP/USD.

VIX Fear Index Spikes

The wobble in investor sentiment also manifested itself in a mini-spike for the closely-watched VIX ‘Fear Index’, which gauges the propensity for US traders to place protective ‘put’ orders on their share transactions.


VIX has jumped to as high as 16.55 on the day. The Fear Index had been languishing below the 12.00 threshold as recently as last Friday, meaning that the intervening period has seen it increase by a startling 37.92%.

Asian Data Triggers Flight to Safety

The flight to safety from global investors during the past 48hrs was largely driven by data released in the Far East at the start of this week’s session.

Analysts had not been expecting the latest version of Japan’s Q3 Gross Domestic Product figures to show much of a change from initial estimates.

How wrong they were. Sunday night’s numbers brought a massive downward revision which showed that activity levels in Asia’s second economy had dropped by an annualised 1.9% during the three months to the end of September – down from the previous estimate of -0.5%.

Gains Forecast for GBP AUD & GBP NZD

Investor sentiment took another hit a few hours later when November’s trade numbers showed that the level of Chinese imports had unexpectedly dipped by 6.7% - economists had been projecting a gain of some 4.0%, so the data hit global appetite for risk hard.

The main losers from the disappointing Far Eastern numbers were the export-driven Australian and New Zealand Dollars (currency:AUD) (currency:NZD).

The disappointing Asian data helped to send the Pound Australian Dollar and Pound New Zealand Dollar exchange rates up to their near-term highs of 1.9020 GBP AUD and 2.0541 GBP NZD respectively earlier on today. Most analysts forecast that there may be further gains to come for these two pairs moving forward.

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