Currency Update-Euro Registers Gains, USD and AUD Fall

The Euro gained against the US, on expectations that the European Central Bank is looking towards increasing interest rates to combat inflation. The Euro/USD exchange rate rose by 0.2210 percent to be at USD $ 1.4860.

The European Central Bank President, Jean-Claude Trichet, is expected to announce today an increase in the interest rates in order to combat rising inflation. This news has spurred investors towards purchasing Euro against the dollar, causing the strengthening of the Euro. Also,the Institute of Supply Management’s index of non-manufacturing sector fell to 52.8 in April, signalling the slowest growth in the service sector in the US in eight months.Moreover, the ISM’s measure of new orders at services providers fell to 52.7,the lowest level since December 2009, while the gain in employment in the US of 179,000 was the smallest in five months.All of these are signs of a slow growth in the US economy, and also contributed to the USD/JPY exchange rate falling by 0.1780 to be at 80.47 Yen.

The Australian Dollar fell for a sixth consecutive day against the Yen,after the Australian Bureau of Statistics stated that retail sales in the country had fallen by 0.5 percent in March, registering the first drop in five months. The AUD/Yen exchange rate was at 86.5598 Yen.