Australian Dollar exchange rates flopped on Friday, with its week-long source of support, China, offering less-supportive data on Friday.
The Euro closed off the previous week on a better note overall, with EUR investors piling into the currency after superior German and Eurozone ecostats.
The Australian Dollar closed off what had been a strong overall weak on a low note yesterday, with AUD exchange rates trending negatively against the majority of its peers.
For most of the week, the high value of the ‘Aussie’ was caused by almost record highs in demand for iron ore from China, which came as a pleasant surprise to investors who had previously been forced to contend with wildly fluctuating costs for the Australian mining product.
The good news continued when it was forecast that this level of demand would remain high for the foreseeable future, although yesterday saw virtually all prior optimism get washed away by China’s retail sales, fixed asset investment and industrial production results for July.
On the year, all three of these fields fell, prompting Capital Economics Analyst Julian Evans-Pritchard to state;
‘a further slowdown in investment growth means more policy support may be needed to shore up economic activity going forward’.
The appeal of the Euro shot up considerably yesterday, with both individual member nations and the Eurozone as a whole providing plenty for investors to mull over.
On the negative side, Italy recorded flat growth on the quarter for Q2, while the Eurozone-wide GDP growth rate fell in second estimates for the quarter and the year.
However, support came from Germany, where the annual Q2 GDP growth rate flash more than doubled from 1.5% to 3.1%. In addition, Eurozone industrial production in June rose from 0.3% to 0.4% on the year in June and from -1.2% to 0.6% on the month.
The coming week will start properly on Tuesday, when the first major Australian and Eurozone economic announcements are due.
In Australia’s case, the morning will bring with it new motor vehicle sales for July, as well as the Reserve Bank of Australia (RBA) meeting minutes for August; for context, the RBA cut the national interest rate from 1.75% to 1.50%. If the minutes imply that further rate cuts could be in store, odds are that the Australian Dollar will slip into negative ranges against its peers.
Germany will factor heavily in Tuesday’s Eurozone news, with the evening seeing the German and Eurozone ZEW surveys of economic sentiment announced.
As it stands, estimates have been for an ‘improvement’ from -14.7 to -9.4 for the Eurozone and a greater rise from -6.8 to 1.7 for Germany.
The Australian Dollar Euro (AUD EUR) exchange rate has been trending in the region of 0.6884 and the Euro Australian Dollar (EUR AUD) exchange rate has been trending in the region of 1.4532 recently.
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