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EUR/AUD Exchange Rate Drops -0.6% on Greek Debt Disappointment

The Euro has slumped to 1.4962 against the Australian Dollar today, but the pairing remains near the best exchange rate since June 2016.

  • EUR AUD exchange rate drops to 1.4962 – AUD EUR trades up at 0.6682
  • Euro slumps on Greek debt stalemate – Rising German confidence fails to boost EUR
  • Australian Dollar soars as US Dollar weakens – AU confidence rises after unemployment drop
  • Will creditors agree to bailout deal? – AUD could gains further on confidence stats

Confidence in the Euro has taken a hit following Monday’s Eurogroup meeting, which was convened to discuss Greek debt. It was hoped that Greece’s creditors would agree to unlock further bailout funding, following the Greek government’s approval of austerity measures.

However, creditors were divided on the matter, leaving Greece without funds and traders panicking about a possible Greek default.

Talks are still ongoing, however, so all hope is not yet lost. Voicing his commitment to the talks was Dutch Finance Minister Jeroen Dijsselbloem;

‘I’m sure we can be successful if we take a little more time. The IMF made clear they still want to go to the board but accept we need to do more work to provide the clarity required’.

Eurozone economic data has been more positive, with German manufacturing activity and an IFO confidence score for May both rising.

This news has failed to lift the EUR AUD exchange rate, however, due to US weakness and a supportive AU confidence score.

In the former case, Donald Trump’s 2018 budget has raised concerns in the US, weakening USD and boosting AUD.

The budget draft includes plans to cut funding across a wide area, with the exception of defence funding, which would be increased. The costing plan also includes $1.6bn for the contentious Mexican border wall, which may make the budget unappealing to even Republican officials.

In domestic news, the Australian Dollar has also been pushed up by the ANZ Roy Morgan confidence index, which rose from 109.4 to 110.5 in late May.

Eurogroup talks are expected to continue today, leaving the door open to a creditor agreement on Greek debt. If creditors do grant the next layer of bailout funding to Greece, then the Euro could rally strongly.

More directly, Euro demand may also rise after Wednesday’s German GfK consumer confidence figure is released. June’s result is not expected to see any change from 10.2 points, so a surprise rise could boost EUR AUD trading.

Finally, Wednesday afternoon will bring a speech from European Central Bank (ECB) President Mario Draghi, who will be attending a conference on financial stability.

The Australian Dollar could rise further on Wednesday’s Westpac confidence figure, if it shows greater growth in April than the previous 0.1%.

Additionally, growth in Wednesday’s Q1 construction output stat could also boost AUD demand as it would imply a cooler housing market.

Current Interbank EUR AUD Exchange Rates

At the time of writing, the Euro to Australian Dollar (EUR AUD) exchange rate was trading down at 1.4982 and the Australian Dollar to Euro (AUD EUR) exchange rate was trading up at 0.6673.