Although the ‘Aussie’ is headed for its first monthly decline against the US Dollar since January, the South Pacific asset closed the local session in a stronger position against the Euro.
On Thursday the Australian Dollar was boosted by upbeat global economic news and impressive Chinese manufacturing figures.
While the currency later pared some of these gains, it was holding its own against a pressured Euro.
Overnight China’s conference board leading economic index for April showed an advance from 285.5 to 288.1. As China is Australia’s main trading partner this news lent the ‘Aussie’ additional support.
Meanwhile, the Euro has been feeling the heat this week as a result of mounting speculation regarding the prospect of the European Central Bank introducing additional stimulus next month.
As highlighted by senior analyst Toshiya Yamauchi; ‘Anticipation about some kind of easing by the ECB is growing as we approach the policy meeting next month. The Euro is a sell’.
A slightly mixed bag of economic reports for the Eurozone also had an impact on the EUR/AUD exchange rate.
Data published this morning confirmed that the German economy expanded by 0.8 per cent in the first quarter of the year, quarter on quarter, and grew by 2.5 per cent on the year.
German domestic demand surged in the first three months of the year, climbing by 1.9 per cent following a 0.3 per cent decline in the final quarter of 2013.
However, German exports rose by just 0.2 per cent, less than the 0.6 per cent gain expected and down from a negatively revised increase of 2.5 per cent in Q4.
German imports were up 2.2 per cent. An increase of 1.0 per cent had been expected.
Meanwhile the German IFO business climate index slipped from 111.2 in April to 110.4 in May, a steeper decline than projected.
IFO measures of the current assessment and expectations also fell by more than hoped.
These figures showed that while Germany continues to drive growth in the currency bloc, sentiment is faltering as anti-EU attitudes grow and political uncertainties in nations like Ukraine persist.
It is expected that the European elections will show growing discontent with the European Union.
The Euro is in line to post a modest 0.3 per cent decline against the US Dollar and is also likely to end the week softer against the Australian Dollar and Pound.
Later today additional currency market movement could occur as a result of Canadian inflation figures and US new home sales data.
Investors with an interest in the Euro to AUD exchange rate will also be looking ahead to next week’s German retail sales/employment figures and Australia’s Westpac leading index.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3644,
Euro,,British Pound,0.8093,
Euro,,Australian Dollar,1.4773,
Euro,,New Zealand Dollar,1.5935,
Euro,,Canadian Dollar,1.4854,
[/table]
