The Australian Dollar has in early morning trade moved by 1% following the US data out on Friday. Coupled with some strong data last week inlcuding Aussie Retail Sales and building approvals this has led to some short term Australian Dollar strength against the Pound. Following the weakness experienced by the US Dollar during Friday afternoon the Aussie has been the best performing currency for the last 2 sessions.
It could be argued that the previous interest rate cuts by the Reserve Bank of Australia are now taking effect but to me this is more to do with a possible over selling of the Aussie during December. I still think longer term that we’ll experience further Australian Dollar weakness owing to the problems the economy is facing down under. Australian unemployment data is due out on Thursday morning which is worse than expected could weaken the Aussie again.
Later this morning the UK published UK inflation data under the guise of the Consumer Price Index. Anything different from the expected 2.1% could cause volatility for Sterling exchange rates.
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