The ‘Aussie’ has managed to make notable gains against the Euro and other peers lately, thanks to beneficial domestic data being released.
The Euro has been a less stable option overall, on account of yesterday’s Eurozone ecostats not being universally positive for the appeal of the single currency.
The Australian Dollar made positive movement on the whole last week, owing to a dose of support being offered by its last piece of domestic data of the week.
This has consisted of the AiG performance of service index for May, which has climbed out of the contraction range, rising from 49.7 to 51.5.
Australian Industry Group Head of Policy Dr Peter Burn said in response to the news:
‘With the very big services sector back in positive territory, that’s the sort of news we need in the bigger scheme of things. We’ve got the terms of trade falling, so the prices we get for our exports are falling, so we really do need some encouraging signs in other parts of the economy’.
Less supportive for the appeal of the ‘Aussie’, however, has been the estimation of the OECD that the current housing boom may transform into a ‘dramatic and destabilising’ state of decline in the future.
The AUD was most recently aided by yesterday’s US data, as despite the US’s May unemployment rate falling from 5% to 4.7%, the rate of job growth in the same month was only 38k, a far cry from the predicted 160k figure. This sent the US Dollar diving and subsequently enabled a significant Australian Dollar uptrend.
The appeal of the Euro has mainly been influenced by Eurozone domestic data of late, although it too has been pushed upwards by the poor state of the US jobs situation.
News out of the Eurozone has been that Bundesbank has pushed down its growth forecasts for Germany in 2016 and 2017, although on the whole, the currency bloc’s services PMI results for May were positive.
Elsewhere in the Eurozone, retail sales in April were also mixed, which served to have a neutral net impact on the common currency.
The week to come is set to bring a number of high-impact economic announcements from both sides of the pairing, with Tuesday bringing some of the most impactful of these releases.
First off will be the Reserve Bank of Australia (RBA) interest rate decision for June, which is expected to result in a freeze at 1.75%.
Following on from this will be the Eurozone Q1 estimated GDP growth rate, which is expected to dip on the year but rise on the quarter.
The Australian Dollar to Euro (AUD/EUR) exchange rate has been trending in the region of 0.5037 and the Euro to Australian Dollar (EUR/AUD) exchange rate has been trending in the region of 1.5439 recently.
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