Fresh Round of Stock Market Turbulence Weakens EUR, USD, AUD, NZD

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Pound Falls on 2015 Trade Data

Pound Sterling plummeted at the beginning of the week thanks to the final trade figures for 2015. Although December’s figures showed a shrinking of the discrepancy between exports and imports, the overall picture for trade in 2015 showed a widening deficit, with the shortfall hitting record highs. The Pound has managed to remain strong today despite news that the recovery in the industrial and manufacturing sectors, which had been taking place since 2013, completely stalled last year.

Strong Euro Can’t Escape Financial Market Turbulence

There was a large amount of Eurozone data released towards the end of last week, with the Euro mostly strengthening despite the negative overall tone to the figures. Another stock market rout this week has undermined the common currency’s position, however. After shooting up in value yesterday as traders turned from risky assets to the safer Euro, the single currency is currently trending deep in negative territory as confidence in the stock market returns. There is no data for the Eurozone due out until Friday.

US Interest Rate Speculation Keeps US Dollar Low

The highlight of the week for those interested in the US Dollar was Friday’s US Non-Farm Payrolls, the key employment report which helps the Federal Reserve gauge the health of the economy. The headline number of jobs created was lower than the expected figure, but unemployment fell because more of those jobs were full time roles than economists had predicted. The mixed data has led to confusion over what the Federal Reserve will do with regards to interest rates, so all eyes are on Federal Reserve Chair Janet Yellen, who is making a public appearance today.

Panic Over China Leaves Little Appetite for Australian Dollar

With a large number of investors selling stocks amid a fresh wave of panic, the Australian stock market saw its worst fall in four months this week. Stocks in Australia have now lost a total of -AUD$42 billion in value since the beginning of the year. With investors worried about losing their money, risky currencies such as the Australian Dollar were abandoned in favour of more secure investments, lowering their value. The ‘Aussie’ has recovered today because the US Dollar is weak and because consumer confidence has once again turned positive.

New Zealand Dollar Soured by Pessimistic Data

The New Zealand Dollar managed to remain strong following the release of much better-than-expected jobs data last week, although the turbulence on the stock market caused it to fall in value this week. Westpac bank is predicting that dairy prices could remain low for another three years, which would have a strong negative effect on the New Zealand economy. The ‘Kiwi’ is recovering today thanks to the weakness in the US Dollar. Manufacturing data is due out later today.

Rising Canadian Unemployment Weakens the ‘Loonie’

 Canadian Unemployment was worse-than-expected in January, according to figures released on Friday. Canada is currently one of the most at-risk economies in the world, with a study by Goldman Sachs citing it as the second most likely country to enter a recession within the next two years. Canadian house price data is due out tomorrow, the only significant release left for this week.

Posted by Rewan

Rewan is one of an in-house team of currency analysts working at TorFX, a leading foreign currency broker. In his role Rewan studies the latest currency market movements and writes about the impact of global economics and politics on exchange rates for several online and physical publications.

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