Yesterday the Euro softened against the majority of its currency rivals as a European Central Bank Official intimated that the ECB is seriously considering introducing negative interest rates.
The common currency was also adversely affected by the news that industrial production in the Eurozone fell by more than expected.
However, during Australasian trading the ‘Aussie’ shed recent gains and the Euro was able to advance on its South Pacific counterpart.
The Australian Dollar experienced a reversal of fortunes overnight as domestic employment data fell wildly short of the mark.
Instead of adding the 15,000 positions expected, the Australian economy lost 3,700 jobs in January.
Full-time employment fell by 7,100 following a negatively revised decline of 32,100 in December.
While part-time employment increased by 3,400 the participation rate held at a negatively revised 64.5 per cent.
Consequently the Australian unemployment rate climbed from 5.8 per cent in December to 6.0 per cent last month – the highest level for almost eleven years.
Economists had expected the jobless rate to rise to 5.9 per cent.
Given that the Reserve Bank of Australia has only just adopted a more hawkish rhetoric this news is a particularly significant blow.
If the nation’s employment sector continues to struggle the RBA may have to reconsider cutting interest rates over the next few months.
In the opinion of currency strategist Joseph Capurso; ‘The Australian labour market has been the weak spot in the economy in the past year and this has not changed today. The Aussie is likely to continue drifting lower’.
The Euro’s advance on the Aussie was aided by the news that German inflation figures came in at expected levels last month.
The publication of the ECB’s monthly report could inspire further EUR/AUD movement, but economists will also be looking ahead to tomorrow’s growth reports for the Eurozone and its largest economies.
Today notable market volatility may be triggered by advance US retail sales data. Economists have forecast stagnation so a surprising result could either boost the ‘Greenback’ or push it lower.
US initial jobless claims will also be of interest.
Before the weekend the RBA’s Assistant Governor is due to speak in Sydney.
This event, and the release of Chinese inflation figures, may cause further ‘Aussie’ movement.
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,1.3626,
Euro,,British Pound,0.8195,
Euro,,Australian Dollar,1.5226,
Euro,,New Zealand Dollar,1.6401,
Euro,,Canadian Dollar,1.4964,
[/table]
