The Australian Dollar (AUD) exchange rate advanced against the weakened Euro (EUR) but was holding ground against the Pound (GBP).
More bad data out of Germany sent the Euro lower to come close to its weakest level in nearly two months against the Australian Dollar and saw it decline against a basket of other currencies. Fears are increasing that the Eurozone’s largest economy will slide into recession in the fourth quarter of the year, something that will weaken the Euro substantially.
Data released by the German Statistics Office showed that German retail sales made their biggest monthly drop in more than seven years in the month of September. Sales plummeted by 3.2% compared to August to make the biggest fall since May 2007.
‘A drop had been expected after the strong August figures, but not this kind of dramatic fall. It is bad because it makes a recession in Germany more likely. Pressure on the European Central Bank is growing as things are not going well even in Europe’s largest economy,’ said Holger Sandte, an economist from Nordea Bank.
AUD/GBP Little Changed
The Pound was little changed against the ‘Aussie’ despite the release of a report, which showed that consumer confidence in the UK, softened in October as concerns over the global economy worried UK shoppers.
According to the Gfk research group, its consumer confidence index fell to a reading of -2 this month, a drop from the -1 recorded in September.
The index has fluctuated over the past year as the UK economy has strengthened despite the dragging effects of the faltering Eurozone economy. With no other UK data due for release the AUD/GBP exchange rate will depend on events in the USA and Europe.
Against the US Dollar the ‘Aussie’ eased slightly after domestic data released In Australia, showed that third quarter PPI rose 0.2%, meeting expectations while September private sector credit from the Reserve Bank of Australia (RBA) gained 0.5%, above the 0.4% month-on-month seen.
Australian Dollar (AUD) Exchange Rate Forecast
Data released over the weekend could offer support to the Australian Dollar. The AIG Manufacturing Index is due to be published and an improved figure could offer signs that the nation’s manufacturing sector is edging back towards expansion levels.
Last month’s report showed a reading of 46.5, this month’s is forecast to improve to 47.96. In a Purchasing Managers Index (PMI) report, any figure below 50 indicates contraction.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.8817 ,
Australian Dollar,,Pound Sterling,0.5513 ,
Australian Dollar,,Euro,0.7011 ,
Australian Dollar,,New Zealand Dollar,1.1217 ,
US Dollar,, Australian Dollar ,1.1340 ,
Pound Sterling,, Australian Dollar ,1.8146 ,
Euro,, Australian Dollar ,1.4273 ,
New Zealand Dollar,, Australian Dollar ,0.8915 ,
[/table]
