After advancing on a bearish ‘Aussie’ yesterday in response to surprisingly strong manufacturing and services PMI, the Euro was able to consolidate and extend gains on Thursday following the release of yet more positive domestic data.
The Euro edged up against the Australian Dollar and firmed against peers like the Pound and US Dollar as a measure of German business confidence climbed unexpectedly.
Although economists had expected the IFO business climate index to decline from 110.7 to 110.4 in April it actually advanced to 111.2 in a sign that sentiment is improving in the Eurozone’s largest economy.
The IFO German expectations measure jumped from 106.4 in March to 107.3 in April, considerably better than the decline to 105.8 forecast by industry experts.
The result prompted this remark from economist Alexander Koch; ‘The outlook for the economy remains bright on a general basis, and we don’t see movements that could immediately reverse sentiment. But there are risks correlated with rising trade uncertainty with Russia because of the Ukraine crisis, and partly to slower dynamics in emerging markets’.
While this morning’s reports were largely positive, it wasn’t entirely good news for Germany this morning as the IFO’s current assessment index edged up to 115.3 from 115.2 instead of achieving the 115.7 reading hoped for.
That being said, the Euro continued to enjoy a more upbeat relationship with the Australian Dollar as local trading progressed.
The ‘Aussie’ is still on the back foot following yesterday’s concerning domestic inflation figures and less-than-impressive Chinese manufacturing report.
As industry expert Ray Attrill states; ‘The CPI figures are keeping the Aussie Dollar heavier and well off the recent highs. Investors are more comfortable now with the view that the Reserve Bank of Australia is likely to be on hold for a very long time’.
A lack of pertinent Australian data may limit ‘Aussie’ movement before the weekend, although tomorrow’s French jobseekers data could have a modest impact on the EUR/AUD pairing.
Euro (EUR) Exchange Rates
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Currency, ,Currency,Rate ,
Euro,,New Zealand Dollar,1.6102,