The Australian Dollar strengthens on rate cuts

THE Australian Dollar strengthened this past week as the Chinese and EU Central Banks cut interest rates. The Aussie opened the week on 1.5339 to the British Pound and steadily strengthened to 1.5081 to the Pound on Friday.

China, Australia’s biggest trading partner, recorded AUD $11.1 with the country in the month of May. The People’s Bank of China dropped the one-year lending rate by 31 basis points and the one-year deposit rate by 25 basis points. This week will see an array of Chinese data being released including the second quarter GDP levels.  The market seems hesitant about the release of this data which is likely to point to a further slowdown in the world’s second largest economy.

“The ECB didn’t announce extraordinary measures yesterday, such as possible bond purchases,” said Junya Tanase, chief currency strategist at JP Morgan Chase & Co on Friday. “The market is jittery about the status quo in terms of the ECB’s handling of sovereign risks. The Aussie and Kiwi are trading softer in such a risk-averse environment.”

US jobs report disappointed the market as investors continue to see signs of a growing global economic slowdown. The US labour market added only an additional 80 000 jobs, which was below the expectant 100 000. This leaves the US unemployment rate unchanged at 8.2 percent.

Monday will see the release of the Australian jobs figures followed ABS labour force data for June released on Thursday.

GBP / AUD: 1.5164
EUR / AUD : 1.203
USD / AUD : 0.979
NZD/ AUD : 0.7812

Exchange rates as of 08:27, 9 July 2012

Composed by Elizabeth Britz of 1st Contact

:: Note: The above exchange rates are based on “interbank” rates.
If you want to transfer money to or from Australia then please register/login on our website, www.1stcontactforex.com, or call us on 0808 141 2335 for a live dealing rate. Make use of our Rate Notifier to send you alert when the Australian Dollar exchange rate reaches levels you are looking for.