As markets get back to normal following the May bank holiday, the Euro to AUD exchange rate is holding its own despite the Australian Dollar gaining as a result of the Reserve Bank of Australia’s rate decision.
Yesterday the appeal of the ‘Aussie’ was a little diminished as China’s HSBC manufacturing PMI came in at 48.1 in April, down from 48.3 in March and further below the 50 mark separating growth from contraction.
A report also showed that Australian building approvals declined by 3.5 per cent in March, month-on-month, rather than rising the 2.0 per cent expected.
However, the Australian Dollar recovered losses after the Reserve Bank of Australia delivered a comparatively upbeat policy statement and left interest rates at record lows.
The benchmark interest rate held at 2.5 per cent, as forecast by economists, and the central bank intimated that rates will be on hold for the foreseeable future.
RBA Governor Glenn Stevens asserted; ‘Dwelling prices have increased significantly over the past year. Credit growth has picked up a little. […] It will probably be some time yet before unemployment declines consistently. […] Commodity prices in historical terms remain high, though some of those important to Australia have softened further of late.’
While speaking of China, Australia’s largest trading partner, Steven’s noted that the nation’s ‘growth appears to have slowed a little in early 2014 but remains generally in line with policy makers’ objectives.’
Although the Australian Dollar broadly strengthened in the aftermath of this announcement, the EUR/AUD pairing fluctuated during European trading as services PMI for the Eurozone, Germany and France were published.
Final Eurozone services PMI came in at 53.1 in April, in line with forecasts, but French services PMI showed slightly stronger-than-forecast expansion.
However, the German figure was something of a disappointment as it read 54.7 in April, less than the reading of 55.0 expected.
As it stands the Euro remains in a stronger position against the ‘Aussie’, but Eurozone retail sales data is still to be released this morning.
Economists have forecast that sales declined by 0.2 per cent in March, month-on-month, but were up 1.0 per cent on the year.
A better-than-projected result could help the Euro consolidate and extend gains.
Overnight the Euro to Australian Dollar exchange rate could experience additional movement as a result of Australia’s performance of construction index and Aussie retail sales data.
China’s HSBC services PMI report will also be of interest.
Euro (EUR) Exchange Rates
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Currency, ,Currency,Rate ,
Euro,,New Zealand Dollar,1.5941,