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Euro to Australian Dollar Exchange Rate Investors Await Incoming Eurozone Inflation Stats

Euro to Australian Dollar Exchange Rate Sees Limited Movement in Anticipation of Key Data

Since its volatility on Monday, the Euro to Australian Dollar (EUR/AUD) exchange rate has been trending within a tight range near its worst levels since November, as traders lack reasons to move much on either currency.

Both the Euro (EUR) and Australian Dollar (AUD) have been held back in recent sessions by recovering strength in US Dollar (USD) trade, and domestic news has done little for either currency.

Recent Eurozone data has continued the trend of beating expectations, but as investors already expect strong Eurozone economic growth in 2018 this data had little impact on the outlook.

Meanwhile, the Australian government recently forecast that iron ore prices would fall 20% in 2018. As iron ore is Australia’s most lucrative commodity this news made ‘Aussie’ trade less appealing.

Instead, investors are looking ahead to other key ecostats due in the coming week, most especially December Consumer Price Index (CPI) data from the Eurozone.

As investors continue to hope for the European Central Bank (ECB) to take a more hawkish tone, Eurozone inflation continues to be the dataset with the biggest potential influence on Euro trade.

Euro (EUR) Exchange Rates Supported by Data and Political News

The shared currency may have slipped against the Australian Dollar this week, but the pair has avoided further falls thanks to supportive news from the Eurozone reminding investors that the Euro is still an appealing buy.

Tuesday’s Eurozone ecostats included November’s German trade surplus results, which rose from €18.9b to €23.7b. The Eurozone’s November unemployment rate improved from 8.8% to 8.7% as forecast.

On top of data, the Euro has been boosted by market hopes that German Chancellor Angela Merkel’s CDU Party will be able to form another ‘grand coalition’ with the centre-left SPD Party.

News that the two parties had reached an agreement on skilled immigrants caused speculation this week that formal negotiations were edging closer. A ‘grand coalition’ would be the ideal outcome for investors as it would strengthen continuity with the previous government.

Euro to Australian Dollar (EUR/AUD) Forecast: Australian Dollar Could Strengthen Tomorrow

A lack of notable Australian ecostats this week has left the Australian Dollar largely pressured by US Dollar strength and forecasts of weaker iron ore this week, but the currency could see stronger demand on Thursday if upcoming Australian data beats expectations.

Thursday will see the publication of Australia’s November retail sales results, which are forecast to have slowed from 0.5% to 0.4% month on month.

NAB’s December business confidence report will also be published during Thursday’s Asian session, which is a typically influential print.

If these ecostats beat expectations they could bolster market speculation that Australia’s economy will see stronger performance than expected in 2018. AUD investors will be highly anticipating next week’s Australian job market report from December too.

As for the Euro, German growth data due Thursday and French inflation data on Friday could influence the shared currency towards the end of the week.

However, with next week’s Eurozone ecostats looking much more influential, including German and Eurozone inflation data, the shared currency is unlikely to see a notable change in movement until then.