The Australian dollar was trading higher on Monday morning, fuelled by growing optimism about the prospect of the local economy and the probability that the euro zone will inject more stimulus to boost the economy.
As of 7.00 AEST on Monday, the currency was trading at 93.90 U.S. cents, compared to 93.75 cents on April 11. This followed European Central Bank President Mario Draghi’s comments that he will move in to intervene if the euro strengthens any further, reported the Sydney Morning Herald.
The probability that the euro zone interest rate may be lowered or an economic stimulus injected is the core focus of forex markets, said OM Financial senior client advisor Stuart Ive.
“He’s indicated that the ECB is ready to act and the euro has opened 50 points lower (against the US dollar) and the Aussie is considerably higher against the euro,” Mr Ive said from Wellington.
The Aussie was trading at 67.83 cents per euro, compared with Friday’s close of 67.47. The Australian dollar surged past 94.50 U.S. cents after reports indicated that the country’s unemployment rate in March plunged 0.3 percentage points to stand at 5.8 percent.
Ive added that the positive local economic prospects will prop up the Australian dollar, which fell slightly on April 11.
“Since the start of this year, the economic data for Australia has been slowly getting better,” he said.
“The employment data last week certainly surprised the markets, so that’s two good numbers on the trot. It’s always good news when that happens.
“It shows there is a bit of strength coming through on the Australian economy and that will always underpin the Australian dollar.”
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at firstname.lastname@example.org