Global FX Currency Markets ? Latest Leading Indicators for NZD, AUD, CAD

Modified: Friday, 26 February 2016 16:45 BST - Written by Tim Boyer

STORY LINK Global FX Currency Markets ? Latest Leading Indicators for NZD, AUD, CAD

Pound Sterling Hits Multi-Month and Multi-Year Lows on Brexit Concerns

Extreme volatility in the global FX markets in recent weeks has made it difficult for investors to get a feel for the likely future performance of the major tenders, with currencies fluctuating wildly thanks to multiple factors. Our number one analysts takes a look at the leading indicators which are affecting the direction of travel for the Pound Sterling (currency : GBP) against the other major units below –
Commodity prices have had a pronounced effect on the markets since the turn of the year. Many analysts believe that the commodities supercycle which saw the price of raw materials show a slow and steady long-term increase peaked in March 2011. The period which followed brought a gradual decline for worldwide commodities prices which reached a nadir on 20th January.

Commodity Price Movement Impacts CAD Exchange Rate Trading

The closely-monitored Bloomberg Commodity Index slumped to a multi-year low of below 73.0000 on this day, but rapidly climbed in the days which followed, touching a near-term peak of 77.2234 at the end of last month. The improvement coincided with a strengthening of the export-driven Canadian Dollar (currency : CAD), Australian Dollar (currency : AUD) and New Zealand Dollar (currency : NZD). A further shift Northwards for the price of raw materials is forecast to see the Pound Sterling lose further ground against CAD, AUD and NZD.

Safe-haven Swiss Franc (CHF), Japanese Yen (JPY) Movement Expected

Elsewhere, shifts in commodity prices have also had a pronounced effect on global stock markets, with gains for raw material prices invariable triggering gains for equities. With this clear linkage between risk and raw materials established, FX insiders expect future losses for stock markets to drive support for the safe-have Swiss Franc (currency : CHF) and Japanese Yen (currency : JPY). The best tell of risk appetite amongst investors is provided by the VIX ‘Fear Index’ which gauges the number of protective ‘put’ options placed by Chicagoan equities traders on the broad-ranging S&P 500 index. Spikes for VIX are therefore predicted to elicit gains for CHF and JPY against Sterling. If government bond yields fall, that is also considered a sign that investors are in a particularly risk-averse mood.

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TAGS: Australian Dollar Forecasts Canadian Dollar Forecasts Currency Predi Forecasts