Australian dollar strength forecast to continue, AUD/USD readies to break higher pulling GBP/AUD lower
- Details
- Category: Exchange Rates
- Published on Wednesday, 05 December 2012 11:10
- Written by Will Peters
The Australian dollar (Currency:AUD) is holding back this morning after a strong day of gains witnessed yesterday:
The pound to Australian dollar exchange rate is 0.07 pct higher at 1.5393.
The Australian dollar to US dollar rate is 0.06 pct lower at 1.0465.
Today's only significant data release out of Australia concerns the latest GDP release - growth was up 0.5% q/q in Q3 confirming a loss of momentum in the Australian economy, where consumption growth was the slowest in two and a half years.
Yesterday the Reserve Bank of Australia cut the cash target rate to 3% to underpin the economy, the cut was less than forecast which opened the door to strong gains for the AUD.
UBS advise that the Australian currency remains favoured, concerning the AUD/USD: "With trend indicators bullish, the risk is for resumption of upside and a break above 1.0490 would open the doors to 1.0625. Support lies at 1.0393."
Such gains will likely translate to further losses for GBP/AUD.
Markets: Tesco grabs all the attention
Tesco Plc is set to end its five-year attempt to crack the cut-throat U.S. grocery market and will focus instead on its struggling home business and faster-growing emerging markets.
The world's No. 3 retailer said it had launched a strategic review of its loss-making U.S. chain Fresh & Easy that could lead to the sale or closure of its 200 stores.
"We've now concluded that it is not going to deliver acceptable shareholder returns in an appropriate timeframe in its current form," Phil Clarke, chief executive of the British company, told reporters.
"It's likely but not certain that our presence in America will come to an end," said Clarke, speaking from Los Angeles.
UK service sector slows
The UK service sector grew at its slowest pace in almost two years in November, a survey has indicated.
The Markit/CIPS Services Purchasing Managers' Index (PMI) fell to 50.2 last month from October's 50.6.
A reading below 50 indicates a drop in activity, so the November figure adds to fears the economy is on the brink of contracting again.
The report comes ahead of what is expected to be a gloomy Autumn Statement from the chancellor.
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