The Euro to Australian Dollar (EUR/AUD) exchange rate weakened on Thursday, and is forecast to slip to its weakest level in 2-weeks due to the ‘Aussie’ continuing to find support from the decision by the Reserve Bank of Australia to leave interest rates unchanged on Tuesday.
The Euro to Australian Dollar (EUR/AUD) Exchange Rate Fell to a Session Low of 1.3884
Australian and New Zealand financial markets are closed today due to the Anzac national holiday but despite that, the two Oceanic currencies continued to make gains against their major peers.
In Asian trading the ‘Aussie’, received support after data released by the Australian Industry Group and the Housing Industry Association showed that activity in the nation’s construction sector expanded in March.
The Ai Group/HIA Australian Performance of Construction Index for March rose by 6.2 points to drag the sector out of contraction territory and solidly into expansion. In February the index had been at 43.9, now it stands at 50.1.
In a PMI, any figure above 50 indicates expansion whilst a number below indicates contraction.
The strong improvement for March was down to a strong increase in the number of houses being built. The index measuring housing construction also rose strongly by 10.4 points to a reading of 55.8. The figure is the best seen since October last year.
The ‘Aussie’ is forecast to begin to weaken in the long term as expectations remain high that the RBA will cut interest rates in May.
‘It is important that new home building activity does not end up being stifled by the unhelpful policy settings in place, both for the sake of economic growth in the short term and Australia’s housing requirements over the longer term. In this regard, the RBA’s decision not to reduce interest rates this week adds to uncertainty across the economy and represents a lost opportunity,’ said Shane Garret, senior economist at HIA.
The Euro to Pound Sterling (EUR/GBP) Exchange Rate Regained Ground to Trade in the Region of 0.7259
The Euro regained ground against the Pound after the UK currency was weakened by the release of worse-than-forecast trade balance data.
The report released by the London based Office for National Statistics showed that the UK trades goods deficit widened to its highest level in seven months in February. The trade deficit widened to £10.34 billion in February from £9.17 billion in January, whose figure was revised from a previously estimated deficit of £8.41 billion. Economists had expecting the trade deficit to hit £9.00 billion in February.