The euro declined against the Aussie yesterday following the release of worse than anticipated Eurozone Sentix investor confidence data for September. Notably, the German and Eurozone final services PMI data also indicated a contraction in August. This enabled the Aussie to gain ground against the euro. Overall, the EUR/AUD pair declined from a high of 1.4640 to a low of 1.4566 in the past 24 hours.
According to the data published by the Australian Industry Group (AIG), the country’s construction index improved to 47.90 in August, from 45.30 in the prior month, but remains in the contraction zone. A reading below 50 indicates contraction and vice versa. The reported figure reflects the third successive month of contraction.
Australia’s inflation gauge, as per the Melbourne Institute, contracted 0.50% m-o-m in August, following a rise of 1.20% in the prior month.
Furthermore, the job advertisements rose by 2% m-o-m in August to 242,301, following a decline of 1.10% (first in three months) in the earlier month, as per the data published by ANZ. The reported figure is the highest in a decade and reflects a robust labor market despite increasing cash rates and inflationary pressure.
On a year-on-year basis, job advertisements surged 20.20% in August 2022. The S&P Global German final services PMI (purchasing managers’ index) declined to 47.70 in August, from 49.70 in July. The flash estimates pegged the services PMI at 48.20. Economists did not anticipate any change in the preliminary estimates.
The reported reading reflects the successive monthly declines below 50 and underscores an increase in the rate of contraction to the fastest level since February 2021.
Despite a drop in fresh orders, backlogs of work at German service providers rose in August, mirroring a combo of staff scarcity and disrupted distribution chains.
The S&P Global Eurozone final services PMI fell to a 17-month low of 49.80 in August, from 51.20 in July. The flash estimates pegged the final services PMI reading at 50.90. Economists did not anticipate any change in the preliminary estimates. Notably, the services sector fell into a contraction zone for the first time in March 2021.
Likewise, the Eurozone final composite output index hit an 18-month low of 48.9 in August, from 49.90 in July. The reported figure reflects the second successive monthly drop below 50.
The drop in output highlights declining activity in both the manufacturing and service sectors in August.
The Eurozone Sentix Investor Confidence Index declined further to -31.80 in September, from -25.20 in August. The reported reading, reflecting the lowest level since May 2020, was worse than the forecast of -26.80 anticipated by economists.
The current situation index declined to -26.50 (its lowest since February 2021) in September from -16.30 in August. Likewise, the expectation index dipped to -37 (lowest since December 2008), from -33.80.
In the US, Sentix investor confidence dipped to -10.80 in September from -6 in August. The current situation index remained in positive territory but fell to 1.80, from 8. The expectations index decreased to -22.50 from -19.
Overall, the global Sentix investor confidence index fell to -18.70, from -13. The current situation index declined to -13.60, from -6.50. The Expectations Index dropped to -23.70 from -19.30.
The weak Eurozone data is expected to keep the EUR/AUD pair range bound with a slight bearish bias in the days ahead.
The historical price chart indicates that the EUR/AUD pair is declining after facing resistance at 1.4705. The next support is anticipated only near 1.4418. Additionally, the currency pair is trading below its 50-day moving average while the momentum indicator is trending downward. Therefore, we are anticipating the currency pair to remain in a downtrend for the next few trading sessions.
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.
