Those looking to buy pounds with Australian dollars might be paying close attention to this morning’s data from the UK’s lending market for indications as to how AUDGBP exchange rates might fluctuate this week. With the change in stamp duty charges in the UK a surge in consumer spending within the real estate sector was pinned as a key recovery factor for the UK economy in the weeks and months ahead although analysts seem keen to point out that this might only prove to be viable should lending conditions remain viable. This morning’s reports from the Bank of England could offer plenty of clues. Demand for loans within the consumer market stagnated slightly from spring through to early summer so it will be interesting to see how the month of July is reflected in this morning’s release. To add to this, tomorrow’s nationwide housing prices release could hold extra weight with the markets, particularly ahead of Haldane’s speech this afternoon at 14:30. Monetary policy has remained a key driver for currency markets throughout the virus so clues in his figures of a change of stance from the Bank of England (BoE) could quickly result in a shift in value for sterling exchange rates.
There seem to be plenty of drivers for Australian dollar exchange rates in the first half of this week, with key monetary policy updates and domestic data from down under pulling plenty of interest from the global markets. Overnight, the Reserve Bank of Australia (RBA) confirmed they will be keeping interest rates at record lows of 0.25%. The RBA also reiterated its plans to expand on its “term funding facility”, a program designed to bolster the lending capacity of Australian banks to ensure lending conditions remain favourable for a sustained economic recovery. This continued caution reflects the uncertainty across financial markets, and also goes some way to providing insight to the latest set of Gross Domestic Product (GDP) figures too which are due for release tonight. An historic contraction in output across Australian businesses for Q2 is widely expected with as much of a 6% fall being called. This would mark the sharpest drop since GDP figures for Australia began to be measured and might be something that could rock investor confidence in the Australian dollar.
AUDUSD Forecast: Will the Australian Dollar Keep Climbing?
Over the course of the last 12 months, AUDUSD’s highs capped out around the 0.625 mark on interbank mark. With the pairing now hovering in the high 0.61s and a long list of worrying domestic US data, investment banks have been lining up to post their expectations of record low for USD before the end of the year. Today’s employment data from the manufacturing sector could hold extra weight with the markets waiting for the string of releases that breaks the straw on the camel’s back.
AUDEUR Forecast: Employment Figures and Business Confidence Releases Key Drivers
With all this positivity, the Australian dollar saw a particularly strong end to the month of August, tending in the 0.61s against the euro on interbank exchange rates, marking the first time it has hit these levels since the end of July. It will be interesting to see if AUDGBP is able to carry this momentum into September, and through to the final quarter of 2020. This morning sees a long list of data from Europe’s major players and could well end up setting the tone for the value of the single currency for the rest of the week. Italy’s latest business confidence survey from the manufacturing sector might draw some interest. Lockdown easing measures in Italy brought about a fair amount of positive press of late so investors might have been looking for added signs of positivity like today before committing behind the euro further
Of course, the latest inflation data and unemployment levels posted by Eurostat might be the most likely to fuel speculation ahead of this afternoon’s speech from the European Central Bank’s chief economist Philip Richard Lane. Reuters reported yesterday that new cases of COVID-19 had shot up by 50% in August. With the markets growing wary of the imminent threat of an accelerated second spike in cases, investors might be looking out for clues as to whether or not further intervention from the ECB will be needed. This naturally could have an impact on AUDEUR exchange rates and so those in with an imminent AUD EUR requirement could plan around Lane’s speech this afternoon just in case it results in a spike in their favour.