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Aussie dollar in freefall


US Dollar:

Positive US economic news from the US was overshadowed by investors concern over German rules to curb market speculation, and as the impact of the euro crises sunk in, concerns arose about the effect on US firms. Traders are fretting that weakness in the euro will begin to impact profits at multinational US corpo¬rate. But in a rare glimmer of hope, the Federal Reserve upgraded its growth forecasts for this year, on signs of a strengthening economic recovery. US central bankers predicted growth would hit between 3.2% and 3.7% this year, up from an estimate of 2.8% – 3.5% made in January. We saw the dollar play this risk on risk off effect out yesterday as the greenback gave up some of its gains made earlier in the week with players coming back into the market for riskier investments, selling the dollar in the process. However the euro debt crises will not go away and the dollar soon took back some of those losses. It looks like the greenback will remain the investors choice for where to park your cash while this European led debt crises plays out.  Data 13.30: Unemployment Claims expected 439k from 444k. 15.00: Philly Fed Manufacturing Index expected 21.9 from 20.2.     


Sterling was consolidating in ranges against the euro and dollar in Asian trade this morning but has now changed and the pound seems to have taken a turn for the worse. Sterling has been undermined by negative market risk sentiment but its downside is for now supported by speculation that there could be euro-buying inter¬vention. Shares in London plunged by nearly 3 percent, with similar falls across Europe as debt worries which started in Southern European states seem to be spreading further afield, dragging down the pound in its wake. Yesterday did see cable make back some losses as better than expected US economic data did give the mar¬kets a small lift, leading some risk to appear back into the market as the dollar was sold off. That has now been reversed as sterling takes a bit of a whipping, shown more clearly in GBP/EUR as the UK currency starts to post losses even against the battered single currency. Looking ahead to today, we have retail sales figures due at 09.30 and an auction of £3.25bn in 10 year gilts due.  Data 09.30: Retail Sales M/M expected 0.3% from 0.4%



The euro is paring some of Wednesday’s gains against the dollar, pound and yen. The single currency spiked yesterday on talk that the European central Bank could take steps to try to arrest the euros fall. It’s a case of pick what ever rumour you want to explain the euros moves. The ECB, which last intervened to prop up the euro 2000, declined to comment. Still the euros recent decline raises the probability that the common cur¬rency will have to be broken up in some way, which would result in a massive capital crises for European banks. Shocked European ministers are preparing for emergency talks to shore up the euro after markets fell in reac¬tion to panic measures in Germany. Angela Merkel stunned EU capitals by warning that the euro was in danger and triggered fears of a fresh financial meltdown by announcing a ban of risky trading practisers by speculators. The German Chancellors actions opened up new cracks in the single currency, drawing sharp criticism from France and prompting Brussels to issue an appeal for unity.
Data 15.00: Consumer Confidence expected –15 unchanged.



• The Aussie dollar suffered a free fall as offshore investors ditched what they class as high-risk investments. The Aus¬sie dollar plunged as low as 82.72 us cents against the greenback and falling sharply against other major currencies including sterling. Its been a shocking month for the currency, as local inflationary pressures on higher cost of imports flow through the economy. Since the start of May, the Aussie dollar has been the worst performer among frequently traded currencies in the world, and is now at its lowest against sterling since the End of February.


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GBP/USD 1.4373
GBP/EUR 1.1584
EUR/USD 1.2411
GBP/JPY 131.27
GBP/AUD 1.7273
GBP/NZD 2.1154
GBP/ZAR 11.2369
GBP/CHF 1.6540
GBP/CAD 1.5116
GBP/SGD 2.0237
GBP/THB 46.49
GBP/HKD 11.2193 red-down; blue-up (snap shot)

These rates are for indication purposes


For more information or to get the latest spot rates contact:

John Paul Georgiou
Senior Foreign Exchange Broker