Test 1 (E-Dagang)

Question 1


Explain why Australian Dollar (AUD), British Pound (GBP), Euro (EUR) and Canadian Dollar (CAD) are impacted on 6 January 2012. 


Answers

Australian Dollar (AUD)

• US Employment data and jobless claims improved with the ADP Employment data showed a rise of 325k jobs in December, well above the expected 178k jobs. This figure may be impacted by seasonal factors but is still the largest monthly gain since 2001.  

British Pound (GBP)

Major economics events to affect the trading of the British Pound for the week ending January 6th, 2012 as follows :

• On Monday, markets in United States, United Kingdom, Japan, Australia New Zealand and Europe remained closed due to national holidays for the New Year.
• On Tuesday, January 3rd, United Kingdom produced its data on manufacturing activity while in United States, data on manufacturing activity was reported. Moreover, US Federal Reserve released the minutes of its latest monetary policy meeting.
• On Wednesday, January 4th, United States will report official data on factory orders while in United Kingdom data on construction activity will be published. The Bank of England will also report its data on net lending to individual consumers.
• On Thursday January 5th, data on house price inflation and services sector growth will published in United Kingdom. The Bank England will also release its credit conditions survey on Thursday. In United States, industry data on non-farm employment change, weekly data on jobless claims and data on crude oil inventories will be published. Moreover, report on service sector activity will be released by Institute for Supply Management.
• On Friday, several reports will be published in United States which will include report on non-farm employment change, unemployment rate and official data on average hourly earnings.

Euro (EUR)

• At first, things were looking good for the euro. The single currency enjoyed Draghi's confidence regarding the success of the LTRO operation. The aversion of a credit crunch is far from certain, after Friday's events. France lost its perfect AAA rating, together with other euro-zone countries. In addition, Greece is on the brink of default after the talks about a haircut broke down.

Canadian Dollar (CAD)

• The implication here is that the Bank of Canada may be a bit more cautious in outlining any rate hikes as we move through 2012 if the labor market situation shows further deterioration. The Canadian dollar has benefited from the expectations for interest rates at the BOC during periods of risk appetite against major rivals.