The Euro maybe continuing to receive a kicking against the likes of the US Dollar and Sterling but it managed to make gains against the Australian Dollar on Tuesday after Reserve Bank of Australia Governor Glenn Stevens talked down the ‘Aussie’.
The RBA chose to maintain interest rates at the record low of 2.5% for a 13th consecutive month and cited that there would be no rate changes for the see able future as it maintained its ‘period of stability’.
Regarding the Australian dollar, governor Glenn Stevens said it “remains above most estimates of its fundamental value,” especially given the decline in commodity prices.
In last month’s review, he only noted the currency was high by historical standards.
Mr Stevens also highlighted a weaker performance in Australia’s employment sector. He said that the Australian labour market, especially given government figures since last month’s statement showed the jobless rate rose to a 12-year high in July. He noted the labour market had “a degree of spare capacity” and it would be some time before the rate declines consistently.
The Euro was able to advance against most of its major peers in a session, which has so far experienced rather strange movements for many of the world’s major currencies.
A combination of concerns over the Russia/Ukraine conflict and the overall global economy would normally see the single currency come under pressure.
Official data out of Spain would also have typically pushed the Euro lower as official data showed that the number of unemployed people in the country increased by 8,100 in August, well below economist expectations for a rise of 26,000.
Strangely, the Euro was able to regain ground against the Pound as the UK currency was experiencing weak underlying sentiment. Manufacturing data was poor on Monday with exports well down.
GBP is forecast to decline throughout the session lower all day long after slipping through the 200-day moving average for the first time in 3 years so there is significant pressure pulling it lower against the Dollar.
Concerns that the UK is losing economic momentum, the BoE now unlikely to raise interest rates until spring at the earliest and falling inflation are all weighing upon the Pound.
Weird movement, Pound performed well on bad data yesterday, and failed to perform on good data today. A Construction PMI report showed that activity in the sector hit a seven-month high.
Despite the positive data, Sterling continued to drop and slipped back below the 1.26 level against the Euro.
Investors will now be focusing on Thursday’s European Central Bank policy meeting and Wednesday’s Eurozone PMI and Retail Sales data.
Euro Exchange Rate News:
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