While Euro movement was a little stilted ahead of the European Central Bank’s policy decision, the common currency began the local session in a softer position against the Australian Dollar.
The ‘Aussie’ soared to a two-week high against the US Dollar and posted notable gains against several of its other major rivals after the publication of unexpectedly impressive domestic employment figures.
The Australian economy was shown to have added 14,200 positions in April following a positively revised increase of 21,900 in March.
As a result the Australian unemployment rate held at 5.8 per cent rather than rising to 5.9 per cent as expected.
The participation rate came in at 64.7 per cent last month, down slightly from March’s positively revised figure of 64.8 per cent.
Economic reports for Australia have been a little patchy of late so this data was a welcome surprise.
‘Aussie’ gains were also inspired by unexpectedly strong Chinese trade figures.
As China is Australia’s main trading partner, the news that the level of both China’s imports and exports jumped unexpectedly pushed the Australian Dollar higher.
Economists had expected Chinese imports to decline by 2.1 per cent in April, year-on-year, following an 11.3 per cent drop in March. However, imports actually increased by 0.8 per cent last month.
Similarly, exports rose by 0.9 per cent in April on the year rather than falling by the 3.0 per cent anticipated.
Consequently, China posted a trade surplus of 18.45 Billion Dollars and commodity driven currencies like the ‘Aussie’ were bolstered.
While the gains in imports and exports were far from impressive and are still indicative of China’s economic slowdown, they were considerably better than the declines expected.
That being said, according to economist Julian Evans- Pritchard, ‘China’s trade data show signs of recovery but continue to understate the true health of the export sector. April’s low export growth was, as in previous months, largely caused by rampant over-invoicing of trade to avoid capital flows last year, which has created an artificially strong base for comparison.’
While the Australian Dollar largely held its advance overnight, further volatility in the EUR/AUD pairing can be expected to occur as a result of the highly anticipated European Central Bank policy meeting.
Although the recent increase in Eurozone consumer price inflation is likely to prevent the ECB introducing additional stimulus this month, the tone of the accompanying statement will be of particular interest.
If the central bank hints at the prospect of action being taken in the months ahead the Euro could soften against its peers.
The appeal of the Euro was a little dented as the European session began and German industrial production data showed an unforeseen 0.5 per cent decline in March, month-on-month.
Economists had expected an increase of 0.2 per cent.
Before the weekend Australian Dollar fluctuations could be triggered by the publication of the Reserve Bank of Australia’s monetary policy statement.
Euro (EUR) Exchange Rates
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Currency, ,Currency,Rate ,
Euro,,New Zealand Dollar,1.6065,