Greg Gibbs Against Quotations

The Australian dollar has moved up against all other currencies quite sharply. The market has been wrong-footed by the Australian dollar, as has happened on several occasions this year. You get a few strong numbers in Australia and the market has to turn around again.

Against that, the market has started thinking about rate hikes in Europe in the first quarter of next year. That is going to prevent a large fall in the euro.

The hopes were not high for a clear winner based on polls last week, but the poor showing of the CDU suggests the German people were against further pro-business reforms.

The currency and rate futures markets are pricing in a rate hike by year-end and two by the middle of next year and this is why the euro has strengthened, especially against the yen.