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EUR/AUD Exchange Rate TIcks Higher as Hang Seng Index Drops

  • Euro cools on disappointing German and French data
  • Australian Dollar dives on damp market sentiment
  • ECB asks Eurozone banks to detail ‘Brexit’ plans
  • EUR/AUD exchange rate forecast to hold gains

EUR/AUD Exchange Rate Extends Gains as Hang Seng Drops Again

The Euro to Australian Dollar (EUR/AUD) exchange rate ticked fractionally higher by around 0.1% on Thursday morning.

Hong King’s Hang Seng once again ended the session down, dropping by around -0.7%. This caused market sentiment to remain damp and saw reduced demand for the high-yielding ‘Aussie’ (AUD).

Meanwhile, the Euro has cooled versus a number of its major peers after French inflation data and German wholesale prices data failed to meet with respective median market forecasts.

The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5545.


Euro (EUR) Exchange Rates Advance as ECB Prepares for ‘Brexit’ Fallout

The Euro to Australian Dollar (EUR/AUD) exchange rate strengthened by around 0.3% on Wednesday afternoon.

As we draw ever closer to the UK’s EU referendum on June 23rd, campaigns for both sides of the argument are heating up. Despite this, however, ‘Brexit’ fears have eased given major endorsement for the ‘remain’ camp from highly influential global officials.

Although ‘Brexit’ uncertainty has had less of an impact on the single currency, the fact that the European Central Bank (ECB) is keen to make sure all major Eurozone banks can handle the fallout has been received positively by traders. This provided the Euro with support as traders show relief that the Eurozone is making strides to protect itself against the inevitable market shock in reaction to a ‘Brexit’.

‘ECB Banking Supervision is engaging with the relevant banks to ensure they are adequately assessing the risks and are prepared for all possible outcomes,’ an ECB spokesman said.

The Euro managed to advance versus most of its peers thanks to the combination of easing ‘Brexit’ concerns and predictions of long-term delays to a Federal Reserve rate hike. However, with tensions mounting in Greece and the immigrant crisis showing little sign of a speedy resolution, there is a high chance that the Euro will fail to sustain current levels.

The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5474.

Australian Dollar (AUD) Exchange Rates Decline on Damp Market Sentiment

Australian ecostats produced mixed results erring towards positivity. However, the ‘Aussie’ (AUD) declined versus its peers overnight in response to dampened market sentiment. One of the major factors for the return to risk-avoidance was a massive drop in Hong Kong’s Hang Seng Index which was dragged down by property shares.

‘Concerns [are] that the Hong Kong government will not ease the property cooling measures even if they [prices] dropped by 30%,’ said Andrew Sullivan, a sales trader with Haitong Securities. ‘Also [there is] a lack of clarity over the state of the Chinese economy and whether we will see more stimulus and whether the injection of liquidity in Q1 has been effective.’

Also weighing heavily on demand for high-yielding or commodity-correlated assets was a warning from Japan’s top trading houses that commodity prices are likely to fall further.

‘The negative price pressure on metals and fuels will continue for the next two or three years,’ stated Tatsuo Yasunaga, Mitsui chief executive officer. ‘We must waste no time strengthening our non-resource businesses.’

One major positive for the Australian Dollar, however, was May’s Westpac Consumer Confidence Index which advanced from 95.1 to 103.2. The reason for the shift in consumer optimism is the positive reaction to the Reserve Bank of Australia’s (RBA) surprise rate cut last month.

The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.5394 during Wednesday’s European session.

EUR/AUD Exchange Rate Forecast to Hold Gains ahead of Eurozone Industrial Production

Given the complete absence of further domestic data, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold gains for the remainder of Wednesday’s European session.

There is potential for EUR/AUD volatility overnight with Australia’s Consumer Inflation Expectation data due for publication. However, with market sentiment showing little sign of a swift change, Australia’s data may not be hugely impactful as has been seen today. As Thursday’s session progresses, Eurozone Industrial production data is far more likely to cause EUR/AUD volatility.

The Euro to Australian Dollar (EUR/AUD) exchange rate reached a high of 1.5533 during Wednesday’s European session.