The Euro may have edged lower against several of its major rivals following this morning’s slightly disappointing growth report for Germany but the common currency continued to trade higher against a struggling ‘Aussie’.
Although tomorrow’s Australian employment report is expected to show that the nation’s economy added 10,000 positions in December (following November’s 21,000 gain) the unemployment rate is forecast to stay at 5.8 per cent – a four year high.
Australia’s participation rate is expected to hold at 64.8 per cent.
Currency strategist Todd Elmer said this of the potential employment gain; ‘A rise of 10,000 would be significantly above the recent trend. It is not clear that a major improvement in trend should be forthcoming, since the Australian Dollar remains at levels which should dampen jobs growth outside the mining sector.’
The Australian Dollar’s declines against its US counterpart were hastened by yesterday’s more upbeat-than-forecast US retail sales report and the tapering-supportive comments issued by Federal Reserve officials.
This morning the EUR/AUD pairing experienced some modest movement as Germany’s economy was shown to have expanded by 0.4 per cent in 2013, less than the 0.5 per cent growth expected and down from expansion of 0.7 per cent in 2012.
As economist Christian Schulz observed; ‘Germany’s weak 2013 GDP growth highlights the impact of the Euro crisis even on the strongest Eurozone economy. On the positive side, consumption growth was resilient in 2013 and the beginning global recovery should allow Germany to grow at trend rates in 2014.’
A separate report showed that the Eurozone posited a larger-than-forecast trade surplus in November, with the seasonally adjusted trade balance coming in at 16.0 billion Euros in November up from a negatively revised 14.3 billion Euros in October.
The EU’s trade surplus declined from 4.8 billion Euros to 3.4 billion Euros in the same period.
In the second half of the week additional EUR/AUD movement could be occasioned by Australian employment figures, final Eurozone inflation data and the Eurozone’s construction output report.
On the subject of Australia’s employment figures industry expert James Glynn stated; ‘The data is often volatile and subsequent big moves in the Aussie can’t be ruled out. If the unemployment rate rises traders will begin to price in interest-rate cuts. Over the past month bets on another rate cut have eased in line with strong economic reports – especially from the housing sector’.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,British Pound,0.8291 ,
Euro,,Australian Dollar,1.5288 ,
Euro,,New Zealand Dollar,1.6295 ,
Euro,,Canadian Dollar,1.4944 ,