The Australian Dollar to Euro (AUD/EUR) exchange rate declined by around -0.3% during Friday’s European session.
After the Asian session closed market sentiment improved significantly following a 2% rise in the Shanghai Composite Index. This was due to intervention from China’s government using state-backed funds to shore up stock values. The improved risk-appetite saw the ‘Aussie’ (AUD) initially gain in the early stages of Friday’s European session. The gains were short-lived, however, after falling global stock prices diminished market sentiment. US Dollar strength also weighed heavily on demand for the ‘Aussie’. Recent AUD losses will be positively received by the Reserve Bank of Australia (RBA) given long-term complaints regarding overvaluation dragging on economic progress.
The Australian Dollar also softened in response to less-than-ideal domestic data. December’s AiG Performance of Construction Index dropped from 50.7 to 46.8; breaking through the 50 mark that separates growth from contraction. ‘Commercial construction has failed to register any meaningful growth,’ said Ai Group’s chief economist Julie Toth. ‘Looking ahead, the downturn in new orders across all four construction sub-sectors in December is a concern for 2016,’ Ms Toth said, adding that a needed lift in commercial construction approvals and new orders is yet to materialise.
The Australian Dollar to Euro (AUD/EUR) exchange rate was trending in the region of 0.6401 during Friday’s European session.
The single currency started Friday’s European session on the back foot as traders took advantage of Thursday’s significant appreciation and locked in profits. The depreciation was aided by a mixed-bag of domestic data results which saw November’s German Industrial Production fail to meet with the market consensus on both an annual and monthly basis. However, as the session progressed the single currency clawed back losses as traders readjusted positions once profit taking abated.
‘German industrial production declined unexpectedly in November and the trade surplus was below forecasts for that month, official data showed Friday, a sign that Europe’s largest economy is struggling to gain momentum after a weak third quarter. But industrial activity should gather speed over the coming months, the economics ministry said Friday. The economics ministry added that weak demand from developing economies has kept a lid on German industrial activity,’ stated Nina Adam writing for Nasdaq.
The Australian Dollar to Euro (AUD/EUR) exchange rate dropped to a low of 0.6391 during Friday’s European session.
Next week will be likely to start with significant AUD/EUR volatility with the publication of Chinese Consumer Price data on Saturday. A positive result will likely cause the ‘Aussie’ to rally as market sentiment improves significantly. In terms of Australian economic data, Thursday’s Unemployment Rate and Employment Change will be of most significance.
For those invested in the Euro, market sentiment and US Dollar positioning will have the greatest impact on exchange rates. Thursday will be most significant I terms of European data with the publication of German Gross Domestic Product for 2015.
The Australian Dollar to Euro (AUD/EUR) exchange rate climbed to a high of 0.6505 during Friday’s European session.
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