The Australian Dollar to Euro (AUD/EUR) exchange rate recouped recent losses on Wednesday in spite of the Eurozone publishing some encouraging economic reports.
In the aftermath of the Reserve Bank of Australia’s (RBA) interest rate announcement, the Australian Dollar plummeted against peers like the Euro, Pound and US Dollar.
The rate cut was the central bank’s attempt to combat growing global economic pressures, fluctuating commodity prices, inflationary concerns and a strong domestic currency.
However, the RBA’s hope of keeping the ‘Aussie’ down with the measure proved fairly futile and the South Pacific currency recouped some of its decline during local trading.
The Australian Dollar to Euro (AUD/EUR) exchange rate gained by 0.3% and held its advance into the European session.
The appeal of the ‘Aussie’ increased after the price of copper climbed and Australia published an improved AiG Performance of Services index.
Although the gauge of the nation’s services sector remains below the 50 mark separating growth from contraction, it did climb from 47.5 to 49.9 in January.
According to AiG; ‘Respondents to the Australian PSI indicated that the lower Australian Dollar has boosted conditions in Dollar-exposed sub-sectors such as retail trade and tourism, while a pick-up in residential building activity over the past year has increased demand for related services.’
‘However, service sector businesses remain concerned about weak local economic conditions and subdued consumer and business confidence. Some respondents said that state elections in NSW and Queensland, as well as uncertainties around a few large public infrastructure projects (e.g. East-West Link in Melbourne), have dampened demand for business services such as accounting, legal, personnel and administrative services.’
The Australian Dollar to Euro (AUD/EUR) exchange rate achieved a high of 0.6847.
The AUD/EUR currency pair continued trending in a stronger position even as the Eurozone published positively revised Services/Composite PMI’s for Germany and Italy.
A better-than-expected retail sales report for the currency bloc also failed to prevent the Euro’s decline.
In the Eurozone retail sales rose by 0.3% on the month in December. Stagnation had been forecast.
During the Australasian session, the Australian Dollar to Euro (AUD/EUR) exchange rate could extend gains if Australia’s HIA New Home Sales and Retail Sales figures come in positively.
Economists have forecast a 0.3% seasonally adjusted month-on-month increase in sales in December.
Further AUD/EUR volatility may be occasioned by Germany’s Factory Orders figures and the Eurozone’s Retail/Construction PMI.
The Australian Dollar to Euro (AUD/EUR) exchange rate was trading in the region of 0.6797 during the European session.
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