UPDATE
The Euro to Australian Dollar (EUR/AUD) exchange rate advanced by around 0.6% on Thursday morning.
Given that the most recent European Central Bank (ECB) interest rate decision happened prior to the Volkswagen scandal, and before data which showed Eurozone inflation dropped into negative territory, most traders believe the minutes published today will be comparatively hawkish, but obsolete. However, the single currency rallied on Thursday morning which is most likely because it transpires that the ECB has a greater number of options for expanding quantitative easing. Pacific Investment Management Co. noted that the central bank has the option to refocus on the bonds of Europe’s higher-debt and -deficit nations.
Meanwhile, the Australian Dollar edged lower versus its major peers despite rising iron ore prices. This is mainly the result of traders locking profits after the recent surge opened up some attractive selling opportunities. Gold prices have dropped which is also weighing on ‘Aussie’ (AUD) gains, as a slight fall in copper prices. The depreciation is fractional, however, after rising China stocks supported demand for the South Pacific asset.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5718.
Yesterday…
EUR/AUD Exchange Rate Predicted to Plummet despite Slowing Australian Construction Output
The Euro to Australian Dollar (EUR/AUD) exchange rate dived by around -0.8% on Wednesday afternoon.
Despite a succession of less-than-ideal domestic data results, the single currency has been fairly resilient thanks to a weak US Dollar. However, today’s disappointing data was one step too far, especially when considering the rising potential for the European Central Bank (ECB) to expand liquidity in order to promote Euro-area price pressures. On the year, German Industrial Production saw 2.3% growth in August, missing the median market projection of 3.3% growth. On a monthly basis, German Industrial Production contracted by -1.2% in August.
Although the US Dollar was trending in a weak position on Wednesday morning, negative correlation hasn’t been enough to bolster the Euro. With a complete absence of further domestic data to provoke volatility, the common currency is likely to continue trending lower versus its major peers. What is more, a speech by ECB President Mario Draghi avoided talk of monetary policy completely which compounded uncertainty and weighed on investor sentiment.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5611.
AUD/EUR Commercial Exchange Rate Forecast to Rally after IMF Report weighs on US Dollar Demand
Despite the fact that Australian economic data has produced mostly disappointing results of late, the Australian Dollar strengthened versus its major competitors on Wednesday. The appreciation is partly the result of ongoing support following the Reserve Bank of Australia’s (RBA) decision to hold the cash rate, but also as a result of dovish predictions regarding the timing of a Federal Reserve benchmark rate hike. Despite the fact that Fed policymaker John Williams made a speech in which he called for a cash rate hike this year, most traders are less confident. A report from the International Monetary Fund (IMF) forecast a global economic slowdown for the fourth consecutive year. This weighed on Fed rate hike bets because a slowdown led by China is not an environment in which the central bank will want to tighten policy.
An improving stock market landscape, helped by the holiday closure of the Shanghai Composite Index, has seen commodity prices strengthen of late. With the Trans-Pacific Trade deal likely to open up Australia’s export range considerably, many hope that the lower price of commodities will be counteracted by a higher volume of trade.
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.5514 during Wednesday’s European session.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Losses ahead of US Mortgages Data
With a complete absence of domestic data to provoke changes, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold gains for the remainder of Wednesday’s European session. With that being said, however, both the ‘Aussie’ and the common currency are affected by US Dollar movement. Therefore US Mortgage Applications data has the potential to ignite changes for the EUR/AUD spot rate.
Thursday is likely to see EUR/AUD volatility with German Trade Balance data due for publication. The ECB minutes from the most recent monetary policy meeting will also impact on shared currency movement. An absence of Australian economic data, however, will see the ‘Aussie’ trading in response to market sentiment, commodity prices, developments in China and US Dollar movement.
The Euro to Australian Dollar (EUR/AUD) exchange rate climbed to a high of 1.5760 during Wednesday’s European session.
