Our Major Import Currencies, Outlook

Well this has been a good week for our Aussie and Kiwi importers as they took advantage of the dip in the Aussie and Kiwi rates on Tuesday afternoon. At
15 Oct 2016 11:00
Our Major Import Currencies, Outlook
The New Zeland and Austrailian Dollar

Well this has been a good week for our Aussie and Kiwi importers as they took advantage of the dip in the Aussie and Kiwi rates on Tuesday afternoon.

At the time of writing, against FJD, AUD best rate was trading at 0.6410 while the NZD best rate was trading at 0.6850 which were the best rates noted for the month of October so far.

“USD is strong again, with AUD and NZD bearing the brunt of the move but all G10 currencies weaker against USD. Diminishing political uncertainty is leading to greater monetary policy certainty,” says Adam Cole at RBC Capital Markets.

The kiwi weakened after RBNZ Assistant Governor John McDermott indicated that further policy easing will be required to ensure that inflation is near the middle of the target range which is from 1% to 3%.

Their consumer price index for June quarter 2016 was recorded at 0.4% and their next policy meeting will be held on November 10.

This is while their 3Q CPI release will be on October 18 and this will indicate whether RBNZ will be cutting their Official Cash Rate (OCR).

The AUD followed suit after dovish remarks from Assistant Governor McDermott speech and continued to weaken when the US bond futures opened weaker even though Australian 10-year government bond yield lifting to as high as 2.72% earlier.

For the month of September, the Yen was overvalued due to a strong dependence on the currency with investors choosing the yen as a safe-haven.

The Yen is tied to the US Dollar and in the same month the US Dollar was fluctuating at a weakening rate.

When the US Dollar weakens, investors run after the yen – the “safe-haven” currency.  The JPY for this month is weakening and we saw the best rate trading at 50.30 against FJD.

This is due to the US Dollar regaining its strength which is due to a perceived victory from Democrat Hillary Clinton, whose policies are consistent with President Barack Obama’s so it gave the market stability.

If Republican Donald Trump is perceived as the winner, investors could be turned off the US Dollar amid concerns of market instability.

His rating was set at a new low of just 17% from 35% in late September.

Apart from this, the US Dollar continues to strengthen on the back of increasing bets that the Federal Reserve will hike interest rate by year-end which hit a new four-month high of 75%.
This is an informative publication, sponsored by The Fiji Sun, Fiji Bureau of Statistics and HFC Bank. All views expressed or implied are purely of the Treasurer at the HFC Bank, Peter Fuata.


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