The Euro (EUR) remained weaker against both the Australian (AUD) and New Zealand Dollars (NZD) on Tuesday as economic data released at the start of the week did little to ease concerns over the strength of the Eurozone economy.
On Monday, the Euro came under pressure from the release of data, which showed that manufacturing activity across the Eurozone increased less than forecast adding to concerns that the currency bloc is sliding closer towards a triple dip recession.
The New Zealand Dollar strengthened on Tuesday against the Euro as economists raised their expectations that domestic employment data would come in positively and that a dairy auction would show that prices of the nation’s most traded export improved.
Currently dairy prices are down by 50% since February’s peak and the sharp fall has had a heavy negative impact upon the New Zealand economy. ANZ Bank however believes that the upcoming auction will show that prices will rise as the supply of key products is lessened.
The employment data is forecast to show a fall in the unemployment rate from the 5.6% recorded in the second quarter to 5.4% in the third.
If those reports come in negatively then the Euro could regain some lost ground.
‘If dairy prices plummet noticeably and there is a sudden rise in unemployment then we can expect a more directional bearish move downwards,” said Matt Simpson a senior market analyst.
The Australian Dollar meanwhile advanced after domestic data showed that retail sales increased broadly in September. According to the Australian Bureau of Statistics (ABS), retail sales increased by 1.2%, beating economist expectations for a rise of 0.4%. Sales inched higher by 0.1% in the preceding month.
In a rare move, the ABS said that the release of the Apple iPhone 6 was the main cause for the sharp increase in retail sales.
Also supporting the Australian Dollar was the decision by the Reserve Bank of Australia (RBA) to leave interest rates unchanged at the record low level of 2.5%.
The Euro is forecast to experience further volatility against its major peers due to the release of the latest Producer Price Inflation (PPI) data. A weaker than forecast outcome and concerns over deflation will likely increase and therefore put further pressure upon the Euro.
The publication of US data later in the session could also weigh.
Euro Exchange Rate News:
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