The shocking news that Australia’s unemployment rate had risen to a ten year high of 6.0 per cent pushed the ‘Aussie’ into freefall and the currency dropped against the majority of its most traded rivals on Thursday.
The Euro was able to advance on its South Pacific peer and extend gains throughout the European session as investors bet that growth figures for the Eurozone would show that the currency bloc’s recovery continued in the final quarter of 2013.
However, during Australasian trading the ‘Aussie’ recouped losses thanks to the news that consumer prices in China climbed by more than economists had forecast.
The appeal of higher-risk currencies increased after China’s inflation data showed that consumer prices rose by 2.5 per cent in January from the same period of the previous year. Economists had envisaged an increase of 2.4 per cent.
The nation’s producer price index declined by 1.6 per cent, as expected.
In the opinion of one forex analyst; ‘The Aussie does seem bid quite well. There’s little reason to be pessimistic about China. Compared to January, risk appetite looks much better.’
However, the ‘Aussie’ swiftly trimmed its advance against the Euro as the common currency was supported by the surprising news that the French and German economies expanded by more than anticipated in the fourth quarter of last year.
German GDP increased 0.4 per cent from the third quarter to the fourth, more than the 0.3 per cent gain expected.
On the year the Eurozone’s largest economy grew by 1.3 per cent, as expected.
Given that recent economic reports for Germany have been patchy at best today’s data was a pleasant surprise.
Meanwhile, the French economy expanded by 0.3 per cent in the last three months of 2013 following positively revised stagnation in the third quarter.
As France has been one of the currency bloc’s biggest concerns in recent months this better-than-expected result was very welcome.
Growth figures for Italy came in at expected levels, with fourth quarter GDP rising by 0.1 per cent in the first quarterly advance since 2011.
In spite of a fresh bout of political concerns in Italy, the Euro advanced on peers like the US Dollar and strengthened against the ‘Aussie’ and Pound after the figures were published.
With Eurozone growth data due out at 10:00 GMT the Euro could experience additional volatility before the close of the European session.
As German and French growth surprised to the upside the currency bloc could post a better growth reading than the 0.2 per cent expected.
If that proves to be the case the EUR/AUD pairing will end the week on a high.
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,1.3699,
Euro,,British Pound,0.8199,
Euro,,Australian Dollar,1.5185,
Euro,,New Zealand Dollar,1.6388,
Euro,,Canadian Dollar,1.5015,
[/table]
