The Australian Dollar to Euro (AUD/EUR) exchange rate climbed in Wednesday’s European session after upbeat Chinese data and Reserve Bank of Australia (RBA) interest rate stability boosted the ‘Aussie’.
The Euro has been trending lower as a result of ongoing Greek negotiations as well as data releases. Although Greece managed to secure an extension on its current bailout programme, a long-term deal is yet to be struck and Spain has suggested that Greece will no doubt require another bailout in the future.
Spanish Minister of Economy Luis de Guindos commented: ‘We have given ourselves these four months to one, see what the real situation is, to see how Greece has met conditions and to try and establish what happens next… which is fundamentally a third rescue.’
In addition, fears for the European Central Bank’s (ECB) quantitative easing (QE) programme are heightening as some economists suggest there aren’t enough bonds in circulation for the central bank to purchase.
Additionally, data didn’t offer the Euro much support on Wednesday when German, Italian and Eurozone Services and Composite Purchasing Managers Indexes (PMI) fell below forecasts.
Overall, Eurozone Services reached 53.7 in February, a little below the 53.9 prediction, while the Composite PMI hit 53.3, a little shy of the flash forecast of 53.5.
The Markit report commented: ‘The growth rate of Eurozone economic output accelerated for the third straight month in February, rising to its highest since July of last year. At 53.3, the final Markit Eurozone PMI Composite Output Index signalled an expansion for the twentieth month in a row, but came in slightly softer than the earlier flash estimate of 53.5.’
Meanwhile, the Australian Dollar was offered some support on Tuesday when the Reserve Bank of Australia (RBA) didn’t cut rates as forecast. The central bank was expected to make another 25 basis point cut as global growth slows and inflation plummets.
In addition, China’s HSBC/Markit Services PMI jumped to 52.0 in February from 51.8, allowing the composite measure to increase from 51.0 to 51.8.
Markit economist Annabel Fiddes commented: ‘The solid rise in new orders suggests that activity growth may pick up in the months ahead, as firms continued to add to their payroll numbers amid a positive business outlook.’
The Australian Dollar to Euro (AUD/EUR) exchange rate could be influenced by Australia’s Retail Sales and Trade Balance stats released on Thursday. In addition, European Central Bank President Mario Draghi will be speaking on Thursday after making the scheduled monetary policy announcement. His comments could be of major influence for the single currency.
The Australian Dollar to Euro (AUD/EUR) exchange rate is trading at 0.7047. The Euro to Australian Dollar (EUR/AUD) exchange rate is trending in the region of 1.4194.
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