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Euro Australian Dollar Exchange Rate Tumbles on Strong Australian Job Data

  • Euro Australian Dollar Exchange Rate Hits 1.46 – Lowest level in over a month
  • Australian Employment Stats Impress – May data well above expectations
  • Eurozone Inflation Meets Expectations – Euro flat on Friday
  • Forecast: RBA Meeting Minutes on Tuesday – Optimistic report would strengthen AUD

Euro Australian Dollar Fails to Recover on Friday

After tumbling on Thursday and continuing to edge lower throughout Friday’s European session, the Euro Australian Dollar exchange rate looked on track to end the week near its lowest levels since the beginning of May.

At the time of writing, EUR AUD trended near a monthly low of 1.4665.

The Euro failed to find any support from the week’s Eurozone data or the latest developments in Greece, as a resurgent Australian Dollar benefitted from Australian job data.

Next week, EUR AUD is likely to react to the Reserve Bank of Australia’s (RBA) meeting minutes on Tuesday. The Euro will take point later in the week when Markit publishes its preliminary June PMIs for the Eurozone.

[Previously updated 12:35 BST 16/06/2017]

On Friday morning, the Euro Australian Dollar exchange rate continued to trend near its lowest monthly levels as investors continued to buy up the ‘Aussie’ following this week’s news. EUR AUD hit a new weekly low of 1.4673.

Friday’s Eurozone data did little to influence the Euro. The Eurozone’s final May Consumer Price Index (CPI) report met expectations of 1.4% year-on-year and -0.1% month-on-month.

The Euro was slightly boosted by news that Greece had been granted €8.5b of new bailout loans by the Eurozone, but as long-term uncertainty remained about Greek debt the shared currency’s strength was limited. This allowed the ‘Aussie’ to easily hold its recent highs.

[Previously updated 16:55 BST 15/06/2017]

After briefly hitting a low of 1.4697 on Thursday afternoon, the Euro Australian Dollar exchange rate appeared to find support around the level of 1.4700, which it trended near towards the end of the European session.

The Australian Dollar remained in high demand due to the day’s strong Australian employment stats as well as the antipodean currency’s high yield.

Friday is unlikely to alter EUR AUD exchange rate movement much, unless the Eurozone’s final May Consumer Price Index (CPI) report surprises investors.

Better-than-expected Eurozone inflation would boost EUR AUD and help it recover from the week’s lows. However, worse-than-expected inflation would instead see EUR AUD tumbling even lower.

[Published 11:31 BST 15/06/2017]

The Euro Australian Dollar exchange rate has been unable to hold its ground this week, as Eurozone data fails to impress markets while key Australian data has come in well above expectations. Demand for high-yielding currencies has also benefitted AUD.

EUR AUD began the week trading at around 1.4855. Since Wednesday the pair has tumbled and during Thursday’s European session the pair hit a low of 1.4698. This was the pair’s lowest level since the beginning of May.

Eurozone Data Fails to Support Euro (EUR)

While the Euro started the week out strong due to the weekend’s French legislative election news, the shared currency has since fallen limp as the week’s economic data has failed to impress.

Wednesday’s Eurozone industrial production and employment change results did beat expectations, but German economic sentiment has dropped according to a ZEW survey and French inflation was worse in May than projected.

Thursday saw the publication of final May Consumer Price Index (CPI) results from France and Italy. While Italy’s inflation met expectations, France’s inflation stat disappointed. Month-on-month inflation was projected to remain at 0.1% but instead dropped to 0%.

The Eurozone’s April trade balance data also disappointed on Thursday. The surplus was projected to slip slightly from €30.9b to around €27.2b, but instead dropped to €17.9b. The previous figure was downgraded to €30b.

As the Euro has performed strongly in recent weeks, investors have opted to sell the shared currency from its highs in profit taking too. This as well as underwhelming Eurozone data has led to a weakening Euro this week.

Australian Dollar (AUD) Surges as Employment Report Impresses

After weeks of mixed movement, and poor performance in Australian commodity trade, the Australian Dollar has strengthened considerably this week due to domestic data and market demand for higher yields.

Tuesday and Wednesday’s underwhelming Australian confidence reports were largely overlooked as Thursday’s Australian May employment stats came in well above expectations.

Analysts had been expecting Australia’s employment change figure to slow from 37.4k to around 10k. However, the figure came in at an impressive 42k while the previous result was revised higher to 46.2k.

Investors were also impressed by the full-time employment change print, which jumped to 52.1k while the previous figure was revised higher from -11.6k to -5.7k.

Australia’s unemployment rate unexpectedly improved. Analysts had forecast it to remain at 5.7% but it dropped to 5.5%, despite the participation rate unexpectedly rising from 64.8% to 64.9%.

This report left investors more bullish on the Australian Dollar overall, especially as the Reserve Bank of Australia (RBA) had put focus on the job market earlier in the year.

The Australian Dollar was also supported by an increase in demand for high yielding currencies this week.

While the Federal Reserve did hike US interest rates, underwhelming US inflation data and a lower inflation forecast from the Fed has led to speculation that there won’t be any further US interest rate hikes before the end of the year.

As Australia’s interest rates are still higher than US interest rates, lower Fed rate hike bets have made the ‘Aussie’ more appealing to investors seeking higher yields this week.

Euro Australian Dollar Forecast: Eurozone Inflation Due Friday

While most of this week’s Eurozone inflation stats have met projections, France’s disappointing drop in inflation on Thursday will keep investors anticipating Friday’s inflation stats for the overall Eurozone bloc.

If inflation comes in lower than projections, the Euro Australian Dollar exchange rate is likely to continue falling towards the end of the week.

Friday will also see the publication of the Eurozone’s Q1 wage growth stats, as well as trade balance data for April from Italy and Ireland.

As for the Australian Dollar, this week’s influential Australian news has already come and gone. The ‘Aussie’ could extend its bullish streak if prices of iron ore, Australia’s most lucrative commodity, begin to improve again however.

The Euro Australian Dollar exchange rate is well on its way to recording losses this week and is unlikely to recover unless Friday’s Eurozone data is surprisingly good or market demand for risky high yielding currencies drops.

Looking ahead to next week, investors may react to the final round of French legislative elections on Monday, as well as the Reserve Bank of Australia’s (RBA) latest meeting minutes on Tuesday.

EUR AUD Interbank Rate

At the time of writing this article, the Euro Australian Dollar exchange rate trended in the region of 1.4710. The Australian Dollar to Euro exchange rate traded at around 0.6800.