Last week the Australian Dollar drifted lower against the majority of its currency rivals as a run of disappointing ‘Aussie’ data followed the nation’s impressive employment report.
Goldman and Sachs negatively revised its 12 month forecast for the Australian Dollar and the Ukraine situation inspired a risk-off environment, both developments wore on the South Pacific currency.
Over the weekend Crimea held a referendum to determine whether the region would remain part of the Ukraine or return to Russia.
Crimea voted to rejoin Russia after living under Ukrainian rule for 60 years and both the US and European Union were swift in declaring the referendum as illegal.
Although the vote was fairly definitive, with over 95 per cent of voters opting to return to Russia, the decision has sparked a fresh bout of tensions.
Despite this, during Australasian trading the ‘Aussie’ recovered ground and advanced on almost all of its peers.
The Australian Dollar (AUD) gained on the Euro (EUR) and posted a 0.4 per cent advance against the ‘Greenback’ as Westpac economist Bill Evans asserted that they no longer expect a Reserve Bank of Australia rate cut to occur this year.
According to Bloomberg, Evans asserted; ‘Previously we expected that rates would be reduced by 25 basis points in both August and November. The forecast is now for flat rates throughout 2014.’
Westpac is now envisaging a rate increase being introduced by the third quarter of 2015.
Meanwhile another industry expert intimated that the RBA has said that further rate cuts would have only a limited impact on the Australian economy.
The Euro was also feeling the pressure as European trading began and economists focused on the publication of Eurozone inflation data for February.
If the data shows that consumer prices in the Eurozone remained restrained last month the Euro could edge lower against peers like the Australian Dollar as trading continues.
Overnight further Euro to Australian Dollar movement may be inspired by the publication of minutes from the latest Reserve Bank of Australia policy meeting and China property price data.
At the RBA’s last meeting the central bank attempted to talk down the ‘Aussie’. If the minutes dwell on the detrimental impact of a strong local currency the Australian Dollar may fall.
Tomorrow the German/Eurozone ZEW economic sentiment surveys will be of particular interest.
Euro (EUR) Exchange Rates
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Currency, ,Currency,Rate ,
Euro,,New Zealand Dollar,1.6249,