Homepage » News » EUR/AUD » Euro Australian Dollar Exchange Rate Advances Following Fed’s Hawkish Outlook

Euro Australian Dollar Exchange Rate Advances Following Fed’s Hawkish Outlook

  • Euro Australian Dollar Exchange Rate Near Week’s Opening Levels – Fluctuating tightly all week
  • Federal Reserve Decision Impacts EUR and AUD – Both currencies become more volatile
  • Eurozone’s November CPI Meets Projections – No changes from preliminary figures
  • AUD Forecast: Is the Australian Job Market Improving? – What this could mean for monetary policy

Euro Australian Dollar Exchange Rate Advances on Friday

The Euro Australian Dollar exchange rate was on track to end the week’s European session over a cent above opening levels. The pair advanced past the level of 1.43 as the week’s trade drew to a close.

After American markets opened in the afternoon, USD traders firmed in US assets once again due to the Fed’s bullish 2017 rate hike outlook.

While the Euro was weakened slightly by this movement, traders seemed especially wary of risk-correlated currencies towards the end of the week. The Australian Dollar was sold en masse, allowing the Euro to easily register some gains.

The ‘Aussie’ could be bought from its cheapest levels on Monday which could see EUR AUD fall again. Light, volatile currency trade should also be expected amid the holiday period.

(Previously updated 12:54 GMT 16/12/2016)

The Euro Australian Dollar exchange rate edged higher on Friday as the Euro saw relief from the US Dollar’s strength in recent days.

As the ‘Greenback’ was sold from its highs, the Euro was able to emerge due to its negative correlation with USD. However, risk-sentiment remained low which kept the Australian Dollar pressured.

EUR AUD’s movement was volatile and this volatility is likely to continue as the end of the year approaches, particularly if the Fed’s 2017 rate outlook continues to limit demand for risky currencies like the ‘Aussie’.

(Previously updated 16:46 GMT 15/12/2016)

Euro Australian Dollar Exchange Rate Continues to Fluctuate throughout Thursday

Despite briefly hitting a 2016 low on Thursday afternoon, the Euro Australian Dollar exchange rate saw no significant change on value throughout the day and continued to trend closely below the week’s opening levels.

‘Aussie’ bullishness faded towards the end of the European session after trending strongly earlier on Australian employment stats, and the currency could continue to see weakness on Friday depending on lasting demand for the US Dollar.

As Friday will not see any significant dataset publications from Australia, the Euro is more likely to take point in EUR AUD movement towards the end of the week – particularly if Eurozone inflation results surprise analysts.

(Published 12:13 GMT 15/12/2016)

The Euro Australian Dollar exchange rate has seen little movement over the last week, as both currencies were weakened by the Federal Reserve’s hawkish 2017 outlook while also being supported by domestic factors.

EUR AUD began the week trending in the region of 1.41 and besides briefly touching a high of 1.42 on Wednesday evening the pair has fluctuated tightly within the opening region.

Euro (EUR) Holds Ground Versus AUD on Early December PMIs

Despite its negative correlation against the US Dollar weighing heavily on Euro demand on Wednesday evening and Thursday morning, the shared currency was kept away from its worst levels thanks to domestic factors.

This included Wednesday’s news that the new Italian Prime Minister, Paolo Gentiloni, was given a vote of confidence from the upper house of Italy’s senate. As political uncertainty in Italy eased, so did jitters about the rise of populism in the Eurozone – for the time being.

Also vital to the Euro’s Thursday sturdiness has been Markit’s preliminary December PMIs for the Euro bloc. France’s results came in well above expectations, as did Germany’s manufacturing figure of 55.5.

While Germany’s services results disappointed, falling from 55.1 to 53.8 and dragging the composite score down to 54.8, the Eurozone’s overall results were generally optimistic.

Eurozone manufacturing beat expectations, improving from 53.7 to 54.9, while services printed slightly below 53.8 expectations – coming in at 53.1. The Eurozone’s composite PMI figure was 53.9.

Chris Williamson, chief economist at Markit stated on the results;

‘The Eurozone economy is ending 2016 on a strong note. The PMI indicates that business activity has risen at the fastest rate so far this year in the fourth quarter, signalling GDP growth of 0.4%.

Manufacturing business conditions are improving at the steepest rate for five-and-a-half years as the weaker Euro provides a boost to exports. Service sector optimism about the year ahead has meanwhile risen to an eight-month high, suggesting companies are largely shrugging off political uncertainty, for the time being at least.’

Higher economic activity in Q4 2016 will improve investor hopes that the European Central Bank (ECB) will continue to scale back its quantitative easing measures in the coming year.

Australian Dollar (AUD) Bolstered by Improvements in Australian Job Market

Australia’s job market has seen a mixed performance in recent months, which has weighed on the minds of Reserve Bank of Australia (RBA) officials – and of course investors.

Things became a little more optimistic for the job market on Thursday thanks to November’s job market report, which allowed the Australian Dollar to hold its ground a little despite risk-demand being switched off by the Federal Reserve’s hawkish tone this week.

The number of new jobs created in Australia in November was far higher than the expected figure of 17.5k, coming in at 39.1k. The October result was also revised higher, to 15.2k.

While the unemployment rate increased to 5.7% despite being expected to hold at 5.6%, this was partially due to the participation rate increasing by more than expected from 64.4% to 64.6%.

This increased market hopes that the Australian job market was past its worst and would improve in the coming months, which was likely to improve the interest rate outlook from the RBA.

Euro Australian Dollar Exchange Rate Forecast: Eurozone Inflation Results Ahead

The Euro Australian Dollar exchange rate could finally see a little more directional movement towards the end of the week; that is, if the week’s final Eurozone stats don’t meet preliminary figures.

Friday will see the Eurozone’s final November Consumer Price Index (CPI) results published. They are currently expected to meet preliminary results of 0.6% year-on-year, but a contraction of -0.1% is expected month-on-month.

The Euro may not be inspired if the yearly result meets projections, but could struggle if monthly inflation contracted as forecast.

On the other hand, demand for the shared currency would improve on Friday if either the monthly or yearly results beat expectations. This may even allow EUR AUD to advance despite the resilience of the ‘Aussie’ this week.

As for AUD trade, the Australian currency could weaken towards the end of the week if prices of iron ore, Australia’s most lucrative commodity, continue to fall as they did on Thursday. If risk-sentiment remains low this is also likely to limit ‘Aussie’ strength.

At the time of writing, the Euro Australian Dollar exchange rate trended in the region of 1.42 while the Australian Dollar Euro exchange rate traded at around 0.70.