The Eurodollar fell against the Aussie yesterday despite the release of better-than-forecast Italian unemployment rate and unexpectedly positive Sentix investor confidence index data. The rebound in the Australian building approvals enabled the Aussie to strengthen against the Eurodollar. Also, the alarming increase in the COVID-19 infections in the Eurozone also keeps the Eurodollar weak against the Antipodean currencies. Overall, the EUR/AUD pair declined from a high of 1.5820 to a low of 1.5730.
According to the Australian Bureau of Statistics, building approvals grew by 3.60% m-o-m in November, following a decline of 13.60% in the earlier month and surpassed the reading of 3.20% anticipated by economists.
Private sector house approvals increased 1.40% to 10,892 units in November, following a 3.50% growth in October. Also, private sector dwellings, devoid of houses, grew by 9.70% in November, following a drop of 37.90% in October.
The value of all the buildings approved increased 14.80% in November. The growth was led by a 28.30% increase in the value of non-residential buildings, rebounding from a drop of 20% in October.
The value of all residential buildings increased 7.10%, including an 8.50% rise in the value of new residential buildings and a decline of 0.80% in alterations and additions.
According to the Italian National Institute of Statistics, the country’s monthly unemployment rate inched lower to 9.20% in November 2021, from 9.40% in the prior month, and surpassed the unemployment rate of 9.30% anticipated by economists. As a whole, the employment rate increased to 58.90% in November, from 58.70% in October.
Compared to the June-August quarter, the employment increased 0.30% (or 70,000) in the September-November quarter. On a y-o-y basis, the number of employed people rose by 2.20% (494,000) in November 2021.
The Sentix investor confidence index for the Eurozone rose to 14.90 in January, from 13.50 in December, and surprised economists who were anticipating a decline in the reading to 12.60.
The Eurozone current situation index increased to 16.30 in January, from 13.30 in December. Likewise, the expectations index fell to 13.50 in January, from 13.80 in December.
In the case of the US, the Sentix investor confidence index declined to 23.30 in January, from 24.20 in December. Also, the current situation index fell to 34 in January, from 34.30 in the earlier month. Furthermore, the expectations index decreased to 13, from 14.50.
However, the Asian Sentix investor confidence index rose to 21.70 in January, from 18.50 in the previous month. The current situation index grew to 20, from 17.50. Likewise, the expectations index surged to 23.50, from 19.50.
The robust economic data from both the Eurozone and Australia is expected to keep the EUR/AUD pair range-bound in the short term.
The historical price chart indicates that the EUR/AUD pair is declining after facing resistance at 1.5820. The next support is anticipated only near 1.5575. Additionally, the currency pair is trading below its 50-day moving average, while the MACD indicator has a negative reading. Therefore, we are anticipating the currency pair to remain in a downtrend in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
