As predicted the Pound has continued to strengthen against the Australian Dollar. Following the Federal Open Market Committee minutes published last night in the US this caused further Aussie weakness. The recent improvement in the jobs market in the US led to the decision to begin tapering and this was backed up by the ADP jobs number in America yesterday afternoon as well.
The news is good that tapering has begun but owing to the amount of only US$10bn rather than a larger amount this is one of the reasons why global investors have avoided riskier currencies including the Australian Dollar.
Even with Australian Retail Sales higher than the consensus for November released a few hours ago this has done nothing to help the Aussie strengthen.
Chinese inflation came in at 2.5% compared to the estimate of 2.7% which again is worrying for Australia as China is their biggest trading partner. If inflation is low this can lead to a potential rate cut and less demand for Australian resources sending the Aussie Dollar weaker.
Later today the Bank of England releases their interest rate decision closely followed by the ECB. If Mark Carney gives any statement following the meeting expect Sterling to remain strong.
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