September 3, 2015 - Written by John Cameron
STORY LINK Best Exchange Rates: Australian Dollar and New Zealand Dollar Exchange Rates Forecast to Hit Fresh Highs
Legendary bond trader, Bill Gross, of Janus Capital Management, put forward an answer to the question of why global markets have been in a tailspin over the past month.
Conventional wisdom dictates that the wholesale shift out of risk has been driven by fears over a slowdown in the vast Chinese economy, but Gross put forward an alternative explanation yesterday, observing that a potential Federal Reserve interest rate hike later this year may prove to be ‘too little too late’, as far as the global economy is concerned. Gross stated that,
‘The ‘too late’ refers to the fact that they may have missed their window of opportunity in early 2015, and the ‘too little’ speaks to my concept of a new neutral policy rate which should be closer to 2 percent nominal, but now cannot be approached without spooking markets.’
With Halloween fast approaching, the middle part of this month could be prove to be a scary period for market participants The next Fed FOMC policy meeting takes place on 16th - 17th of this month and futures markets are pricing-in a 34% chance that America’s policymakers will use this get-together to announce an increase to domestic interest rates. If the Fed does increase rates this time around, then look for the Pound Sterling Australian Dollar GBP AUD and Pound Sterling New Zealand Dollar GBP NZD exchange rates to climb to fresh near-term peaks.
However, the same futures markets predict that December is the most likely month for the start of Fed policy tightening – such a move is considered to have a 60% likelihood that US interest rates will be on their way higher during the final month of the year.
Looking ahead, the eurozone and the US provide the two major data releases today. This afternoon’s European Central Bank monetary policy decision is likely to be a damp squib, with the euroland’s interest rates remaining at their current ultra-low levels. However, the latest US ISM Non-Manufacturing Composite survey could prove market-moving, with a better than anticipated showing providing the Buck with a renewed shove in the right direction.
Latest Exchange Rates as of Close of Trading 04/09/2015
Yesterday's exchange rates saw the Pound Australian Dollar exchange rate close at 2.19681, Pound Canadian Dollar exchange rate close at 2.01512, Pound Swiss Franc exchange rate close at 1.47383, Pound Euro exchange rate close at 1.36069, Pound New Zealand Dollar exchange rate close at 2.41345, Pound Turkish Lira exchange rate close at 4.56197, Pound US Dollar exchange rate close at 1.51724, and the Pound South African Rand exchange rate close at 21.03585.
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