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Euro bolstered, GBP/EUR hits new two-year low

business-articlesEuro bolstered, GBP/EUR hits new two-year low
  • Euro benefits from US dollar slump
  • Australian dollar supported by RBA rate decision
  • Will the RBNZ cut interest rates?

Euro strengthens before industrial production data
The euro broadly strengthened on Monday thanks to weakness in the US dollar. The common currency was able to storm higher despite the Eurozone’s composite PMI dipping to 51.5.

The GBP/EUR exchange rate hit a fresh two-year low before recouping 0.5% on Tuesday.

Today’s Eurozone data has impressed, with German factory orders rebounding by more-than-expected in June (month-on-month). Orders came in at 2.5% rather than the 0.5% expected.

However, the euro could be shaken tomorrow if Germany’s industrial production data shows the decline in output forecast by economists. 
AUD bolstered by RBA rate decision

At the start of the week, the Australian dollar slumped against a handful of currencies in response to a broad decline in risk appetite.

However, AUD exchange rates bounced back overnight following the Reserve Bank of Australia’s (RBA) latest rate decision.

The Australian dollar rallied against currencies like the euro, pound and US dollar as the central bank opted to keep interest rates unchanged and refrained from hinting that another rate cut is on the way.

‘Kiwi’ under pressure, RBNZ set to cut rates

On Monday the New Zealand Dollar fell victim to a decline in risk appetite and the currency failed to benefit from upbeat domestic employment data.

New Zealand’s unemployment rate came in at 3.9% - an 11-year low – but NZD remained on the back foot ahead of the Reserve Bank of New Zealand’s (RBNZ) interest rate decision.

The RBNZ is expected to cut interest rates to 1.25%. If the bank does cut rates and indicates that further adjustments are on the cards NZD’s downtrend could continue.

Upcoming data:

Tuesday 6th August
23:00     AUD AiG Construction Index

Wednesday 7th August
03:00     NZD RBNZ Interest Rate Decision
04:00     NZD RBNZ Press Conference
07:00     EUR German Industrial Production
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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