Australian one dollar coins
A handful of Australian one dollar coins is shown in Sydney, February 18, 2004. Reuters/Tim Wimborne

Bell FX Currency Outlook: Britain’s uncertainty surrounding possible exit from EU is driving the GBP to the lows not seen since 2009 credit crisis.

Australia: The AUD benefited on the back of a GBP sell off, along with the help of equities, commodities and risk sentiment. It seems like the lows of 0.6830 from early January 2016 are a distant memory now. RBA seems reluctant to consider any more cuts at the moment, and US Fed is likely to be sitting on its hands till the end of the year. All of the above adds to a stronger AUD in the short to medium term, however AUD is still vulnerable to global growth and to Chinese economy. Iron ore prices are now up about 10% from 18 February and 32% from the bottom in December. Oil prices surged higher (Brent 5.3% to $34.77 and WTI Oil 7.8% to $31.94) following the IEA released of its Medium Term Oil Market Report. Today the ANZ-Roy Morgan weekly consumer confidence data will be of interest.

Majors: GBP had its worst day since the UK’s 2009 banking crisis on the back of ‘Brexit’ fears. Data was also not helpful with the UK CBI survey showing continued weakness in the manufacturing sector. EUR was also
weak as flow-on impacts were priced in. Market focus was firmly on the fallout from the conclusion to the UK negotiations with the other 27 countries of the EU at last week’s summit. The referendum has been confirmed for 23 June and the campaigning has begun. Reports suggest up to 150 out of the 330 Conservative MPs are in favour of the UK leaving the EU. Euro-zone PMI’s also came in of the soft side of expectations with German manufacturing pulling back sharply to 50.2 from 52.3 while France’s services PMI dipped back below 50 (49.8 from 50.3).

Economic Calendar 23 FEB

  • AU ANZ Roy Morgan Weekly Consumer Confidence Index
  • GE IFO Business Climate Feb
  • US Fed’s Fischer Speaks in NY
  • US Consumer Confidence Index Feb

Bell Fx

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