Euro rides high again

Yesterday saw no great surprises down under as the Australian interest rate remained unchanged at 3% after it was announced that there was a 1.6% increase in housing prices and a better than expected trade balance registered from the back end of 2012.

Where the unexpected (to a certain extent) did happen is that, despite, a mixture of positive PMI Euro data from many Euro zone countries, retail sales (YoY) overall for the area, came in well under expectation at -3.4% Ordinarily, these results would improve the strength of Sterling and weaken the Euro – as it was, this did not occur and one would assume that the reason for this is the continuing negative sentiment towards the Pound, despite positive PMI data of its own.

It should be acknowledged that while the Dollar and Euro continued to make gains against the pound, the Euro weakened against the Dollar – which perhaps highlights current market sentiment that of the three majors Sterling is at present the “lame” pick.

Continuing political turmoil particularly in Spain has also contributed to a decline in the Euro against the US Dollar, which itself received a boost from the news that the US deficit has shrunk for the first time in 4 years from $1 trillion to “only” $845 billion largely due to an improving economy although the Congressional Budget Office has warned debt will get worse “without further action by lawmakers”.

The market continues to be rather volatile, so if you have any upcoming transfers do keep in touch with your account manager at Currency Index to avoid missing out on the best exchange rates possible and stay one step ahead of the markets.