The Euro (EUR) exchange rate strengthened against the Australian Dollar (EUR/AUD) and New Zealand Dollar (EUR/NZD) on Wednesday as the single currency continued to receive support from upbeat economic data releases.
The Euro to Australian Dollar (EUR/AUD) Exchange Rate hit a session high of 1.3994
Tuesday’s session gave the Euro a boost due to the release of stronger than forecast Purchasing Managers Index (PMI) data out of Germany and the wider Eurozone. Markit’s flash composite PMI, which tracks activity in both the manufacturing and service sectors showed that activity in Germany the region’s largest economy rose to an eight month high of 55.3, up from February’s figure of 53.8 and beat economist forecasts for a reading of 54.0. The composite PMI for the wider Eurozone also beat forecasts by coming in at 54.1.
On Wednesday the Euro received more support as data published by the German research institute Ifo, said that its business climate index climbed to its highest level in eight months in March. The index climbed from February’s reading of 106.8 to 107.9. The figure beat economist forecasts for a rise to 107.3.
The separate Business Expectations Index, which measures attitudes toward business prospects over the next six months, improved to 103.9 this month from 102.5 in February, beating estimates for 103.0. Rounding off the data was the Current Assessment Index, which increased to 112.0 in March from 111.3 in February, in line with expectations for a reading of 112.0.
The Australian Dollar weakened as economists said that the currency’s recent run of gains has run out of steam.
The currency had been moving higher as it took advantage of the weakness in the US Dollar exchange rate but those gains slowed as data released on Tuesday showed that inflation in the USA rose more than expected.
The ‘Aussie’ also came under pressure after Morgan Stanley downgraded its price forecast for iron ore by 28%.
‘The apparent loss of investment confidence in China’s broader industry is exaggerating the bearish impact of Australia’s ongoing supply growth. With only months left before the mid-year peak in sales of commodity-intensive goods, time is running out for China to support commodity prices in 2015,’ said analysts Tom Price and Joel Crane.
The Euro to New Zealand Dollar (EUR/NZD) Exchange Rate hit a session high of 1.4402
The New Zealand Dollar meanwhile dropped against most of its peers after Statistics New Zealand released worse than expected trade balance data.
The nation’s trade surplus widened last month from NZ$33 million to NZ$50 million. The rise was well below expectations for a figure of NZ$375 million.