Euro & Australian Dollar Gains Strength Prior to the Release of the China Data

The euro and Australian dollar witnessed their growth on Thursday which is being seen as a short-term gain ahead of economic reports on China, which may create a downturn situation for both the currencies. Earlier Euro paused at its nearly one-month high, while AUD recorded its two-and-half week high in the market. Both the currencies though reported multi-week highs in the market, but the growing worries about the economic health of China could be reason of a great setback for the currencies, many experts feel.

The euro rises about 0.5 percent on Wednesday reaching $1.3140 from its earlier value of $1.3116. However, this is euro’s one of the best highs since mid-September. On September 17, the currency was at around $1.3173, while in May its best high was at $1.3284.

The world’s second biggest economy may affect the risk sentiments in the market in a big way and could surprise the investors. Meanwhile ahead of China data release, US dollar too reached to its best level in the month against the yen.

The much expected China data is likely to show the symptoms of the Chinese economic slowdown. The country is showing economic sluggishness for a seventh straight quarter and this is worrisome news for many market experts. The Chinese Government is missing their target for the first time as the nation was largely seen unaffected by the global financial crisis. But the financial worry in China has again renewed the fear of an economic slowdown that has been looming large on the global economies.

While the negative implications of the China data on the financial market is more likely, many experts feel that any gain in the market position will inspire investors to take more risks in the market. However, the market is already seen in full swing following the news of Spain accumulating credit line and Moody’s positive nod to maintain the grade rating of the country, until the new developments related to the country’s finances come to the fore.

In the last two days, both the currencies euro and USD have shown a significant rise by making headway over 200-pips. This rising trend is supposed to be fuelled by the Spanish bailout positive reports, but the China data may affect this positive currency growth in an adverse manner, many Currency Analysts feel.

Besides the China data, the market is also carefully and eagerly watching the bond selling program of Spain. The Spanish bond sale on Thursday is likely to raise a fund from the debt market to the tune of around 4.5 billion euros.

Thursday is also the starting day of a two-day summit where the leaders of the euro zone will come together to discuss on some of the vital issues such as appointing a single banking supervisor for the euro zone and integration of the euro zone. Thus, experts are closely watching the summit developments for any major announcements that may bring encouraging results in the market. Keeping in view all these ongoing developments, Thursday could bring some significant driving factors for the market and the market analysts are waiting for the developments with a greater curiosity.

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