Australia Money Transfer News: Election Result sees Improved Outlook for AUD, NZD & ZAR

After a long, expensive and fractious campaign and despite the fact that not all the votes have been counted, President Barack Obama has won re-election for a second term in office by a surprisingly larger majority than most had predicted.

Analysts at Goldman Sachs pointed out that since 1976 the S&P 500 stock market index in New York has gained an average of 10% in the 12 months following the presidential elections regardless of the winning party.

The immediate result in the foreign exchange market is an increase in risk appetite which has dampened demand for the dollar but improved the outlook for the high yielding risk currencies like the Australian and New Zealand dollars and South African Rand.

Yesterday, the euro remained centre stage, falling to its lowest level against the dollar in two months despite a fresh pledge by the European Central Bank (ECB) who meet for their monthly policy meeting tomorrow to buy more government bonds of the struggling euro zone nations.

The Greek government faces two crucial votes in parliament in Athens, one later today and one on Sunday on the implementation of further austerity measures that are needed for the country to comply with the terms of its international bail-out.
In Spain, a report on the Spanish services sector by Markit economist Andrew Harker more than suggest that there are no signs of the economic crisis letting up anytime soon.

Harker said "The latest Spanish services PMI data point to another dreadful month for companies in the sector as the economic crisis showed no signs of letting up. Rates of decline in activity and new business remained substantial, with clients reluctant to spend amid deteriorating economic conditions. Service providers are also increasingly pessimistic with regards to 2013 as the crisis persists and austerity measures aimed at reducing the government’s budget deficit further sap domestic demand."

The pound to euro exchange rate remained largely subdued however as the poor economic data from both sides of the channel persist.

The latest data from the Office for National Statistics (ONS) on UK industrial production showed a contraction of 1.7% month-on-month in September and a contraction of 2.6% year-on-year with the main culprits an unexpectedly sharp fall in output in the mining and quarrying sector which registered its biggest monthly fall since 1997.

Meanwhile, the British Retail Consortium (BRC) reported yesterday that UK retail sales rose by 1.5% month-on-month in October but fell by 0.1% versus a year ago.

Commenting on the data, BRC Director General Stephen Robertson said that “Unfortunately it looks like the modest sales revival we saw in September was something of a false dawn. The disappointing figures are a reminder of the difficult economic realities many are still facing. Falling consumer confidence means people are limiting spending to essential items and are cautious about committing to big-ticket and discretionary buying.”

Money transfers to Australia:-

The outlook for the Australian dollar has improved immeasurably in the last two days after the Reserve Bank of Australia surprised the markets yesterday by keeping Australian interest rates unchanged at 3.25% whereas most analysts had predicted a second cut in as many months. Reserve Bank Governor Stevens cited an ‘improved world economic outlook’ for the decision. The re-election overnight for a second term in office for Barrack Obama has also improved sentiment and the dollar has made further gains overnight. With the outlook for the pound remaining decidedly negative, we may be heading back to the exchange rate that we started 2012 with which represented a 30 year low for the currency pair.