Appetite For Aussie Dollar Wanes In Favour Of US Dollar
By Adam Jordan
Sterling began the new year well after ending the old one badly. The week separating 25 December and 1 January is always a bit of a dog’s breakfast when it comes to FX matters.
The big players are skiing in Vail or Val d’Isère and the lance corporals are trying to win their spurs by making a few bob here and there, leaning on the euro or the dollar or the pound. At the end of 2010 it was the pound they were leaning on. They stopped leaning when the boss came back to work. Sterling put in solid performances on Tuesday and Wednesday, adding the best part of two cents against the euro.
The early flavour this January is of a market better-disposed to the pound than it was before the holidays. Investors also seem to have improved their appetite for the US dollar and lost their taste for the Australian and New Zealand ones as well. It is not clear why this might be, or whether the fashion will survive, but it could be that overvalued currencies are facing a corrective phase. Supporters of the pound will be hoping that undervalued currencies also receive a correction.
Adam Jordan is a currency specialist at foreign exchange provider Moneycorp.