Australian Dollar strengthens following EU Summit

THE Australian Dollar gained on the positive news from the EU summit on Friday. This latest drive by the EU leaders to ease the cost of credit was well received by the market as the Aussie closed the week on $1.53 to the Pound.

This week started off factoring in the effects of the Chinese PMI Data released on Sunday. The official PMI reported for the month of June was 50.2, showing a slightly expanding economy versus the preliminary contractionary expectation reported in the HSBC PMI of 48.2. Both PMI indicators support the growing call for monetary and fiscal policy easing in the world’s biggest export country in an attempt to stimulate domestic demand.

“It is all about growth and employment,” said Mr Qu Hongbin, an economist at HSBC. “As external demand has weakened and domestic demand hasn’t shown a meaningful improvement in response to earlier easing measures, growth is likely to be on track for further slowdown.”

While the positive news at the EU summit on Friday eases the current debt crisis, the long term view still remains gloomy as the debt pile grows in the future. The market will continue to closely monitor developments in the Eurozone in the upcoming weeks and Euro movements will continue to be one of the main driving forces in the market.

Monday morning saw the release of the monthly Australian inflation rate which came in below the central bank’s target at 1.6 percent. The market will look to the Reserve Bank of Australia’s monthly board meeting on Tuesday where sentiment suggests Governor Glenn Stevens will keep the interest rate unchanged.

GBP / AUD: 1.5284
EUR / AUD : 1.2347
USD / AUD : 0.9768
NZD/ AUD : 0.7839

Exchange rates as of 08:38, 2 July 2012

Composed by Monique Chapman of 1^st Contact :: Note: The above exchange rates are based on “interbank” rates. If you want to transfer money to or from Australia then please register/login on our website, www.1stcontactforex.com, or call us on 0808 141 2335 for a live dealing rate. Make use of our Rate Notifier to send you alert when the Australian Dollar exchange rate reaches levels you are looking for.