The Euro to Australian Dollar (EUR/AUD) exchange rate weakened to its lowest level in nearly a week on Thursday as Australian employment data smashed economist forecasts. The Euro to New Zealand Dollar (EUR/NZD) exchange rate climbed to its best level in 6-months following a surprise interest rate cut by the Reserve Bank of New Zealand (RBNZ).
The Euro to Australian Dollar (EUR/AUD) exchange rate was trading in the region of 1.4500 to 1.4654
According to the Australian Bureau of Statistics (ABS), unemployment in the Land Down Under surpassed all expectations in May to send the nation’s unemployment rate to its lowest level in a year. The data eased some of the concerns over the health of the economy.
Employment rose by 42,000 in May, smashing forecasts for an 11,000 gain. The overall unemployment rate fell from 6.1% to 6%. Some economists highlighted worries that the numbers may not be accurate as the ABS did note that there was some very odd results which came out of Western Australia.
‘As always there is volatility in the data, but what a sweet set of numbers. This is a result that should help to ease some concerns about job security. An improvement in confidence would certainly bode well for retail activity and broader economic growth,’ said CommSec economist Savanth Sebastian.
The report also caused economists to raise their bets that the Reserve Bank of Australia (RBA) will choose to leave interest rates unchanged for the foreseeable future.
‘If the unemployment rate is truly past its peak, as these numbers suggest, then it is unlikely that the RBA would deliver any further rate cuts in this easing phase. We expect the RBA to keep its cash rate at 2% in coming quarters,’ said HSBC chief economist Paul Bloxham.
The Euro meanwhile remains under pressure from worries over the Greek debt crisis.
The Euro to New Zealand Dollar (EUR/NZD) exchange rate was trading in the region of 1.5990 to 1.6146
The New Zealand Dollar tumbled against most of its major peers after the Reserve Bank of New Zealand took economists by surprise and cut interest rates for the first time since 2011. The ‘Kiwi’ tanked as the bank announced that it had cut rates by 0.25% to a record low of 3.25%.
Policy makers said that the move was an attempt to maintain the nation’s economic momentum in the face of a slowdown in the Chinese economy, falling commodity process and a stagnating inflation rate.
The bank hinted that more cuts are likely to occur if the situation failed to improve.
‘A reduction in the rate is appropriate given low inflationary pressures and the expected weakening in demand, and to ensure that medium-term inflation converges towards the middle of the target range. We expect further easing may be appropriate. This will depend on the emerging data,’ the bank said in a statement.
Both the Australian and New Zealand Dollars could weaken later in the session if data out of the US comes in strongly. A positive move for the ‘Greenback’ often weighs on the Trans-Tasman currencies.