The Euro advanced on a broadly softening ‘Aussie’ on Thursday as China’s manufacturing report heightened concerns of a slowdown in the world’s second largest economy. Gains were extended as manufacturing/services reports for Germany, France and the Eurozone as a whole surprised to the upside.
As the week drew to a close the EUR/AUD pairing consolidated its five-day advance as the Wall Street Journal published comments from an official source which talked down the ‘Aussie’.
The publication quoted Reserve Bank of Australia board member Heather Ridout as stating that the ‘Aussie’ has not yet fallen enough but if the currency drifted to the 80 cents mark it would be ‘a fair deal for everybody.’
Meanwhile, news that China’s bank regulator has demanded that regional offices examine credit risks in the coal mining industry more closely also weighed on the Australian Dollar and helped the Euro advance.
According to strategist Joseph Capurso; ‘The Aussie is very sensitive to perceptions of risk. If you’re an investor and thinking of which currency you want to short because of emerging-market problems, you sell the Aussie because it’s a liquid commodity currency with a current account deficit.’
The Euro was also able to approach the European session in a stronger position against the New Zealand Dollar following the release of disappointing credit card spending figures for New Zealand.
Credit card spending in the South Pacific nation declined by 1.2 per cent in December following a 3.5 per cent month-on-month increase in November.
On the year card spending increased by 4.7 per cent, down from a gain of 6.9 per cent the previous month.
Euro Forecast
An absence of significant economic data releases could limit Euro movement in the hours ahead, but the common currency is forecast to experience considerable movement next week as German IFO business climate/current assessment/expectations reports are published.
German retail sales and unemployment figures will also be of interest, as will measures of Eurozone consumer confidence.
Australian reports to be aware of include the Westpac Leading Index and private sector credit figures.
Meanwhile, the Reserve Bank of New Zealand rate decision is likely to drive EUR/NZD 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,1.3681,
Euro,,British Pound,0.8220 ,
Euro,,Australian Dollar,1.5757 ,
Euro,,New Zealand Dollar,1.6563 ,
Euro,,Canadian Dollar,1.5204,
[/table]
