The Euro to Australian Dollar (EUR/AUD), Euro to New Zealand Dollar (EUR/NZD) and Euro to Canadian Dollar (EUR/CAD) exchange rates softened in the first half of Wednesday’s session while the Euro to Japanese Yen (EUR/JPY), Euro to Swiss Franc (EUR/CHF) and Euro to US Dollar (EUR/USD) exchange rates all advanced.
Although Greece’s bailout extension for the next four months has been approved, many officials have stated their concerns on the subject.
Industry expert Michael Hewson stated: ‘While the agreement is welcome it doesn’t change the fact that Greece still has limited access to funds, and also doesn’t hide the fact that both the IMF and ECB expressed concerns about the level of detail, and indicated that they would insist that Greece would need to do more if it wanted the release of additional bailout monies.’
Earlier… The Euro to Australian Dollar (EUR/AUD), Euro to New Zealand Dollar (EUR/NZD), Euro to Canadian Dollar (EUR/CAD) and Euro to Japanese Yen (EUR/JPY) exchange rates all gained early in Tuesday’s European trading after final German GDP figures remained in line with forecasts; the Euro to Swiss Franc (EUR/CHF) and Euro to US Dollar (EUR/USD) exchange rates softened.
Earlier… The Euro to Australian Dollar (EUR/AUD), Euro to New Zealand Dollar (EUR/NZD), Euro to Canadian Dollar (EUR/CAD) and Euro to Swiss Franc (EUR/CHF) exchange rates all gained early in Monday’s European session ahead of Greece submitting its reform proposal; the Euro to Japanese Yen (EUR/JPY) and Euro to US Dollar (EUR/USD) exchange rates softened.
The Euro is in for some choppy weeks of trading as Greece meets with Eurozone officials to discuss its austerity deal. While some economists expect Monday’s reform proposal to be made public, others are not so sure that level of transparency will be offered.
In addition, after Eurozone officials allowed an extension of Greece’s current debt repayment scheme so negotiations could continue, the possibility of a Grexit appeared temporarily subdued.
Industry expert Michael Hewson stated: ‘While the fear of a Grexit has been avoided for now, it is by no means off the table, and to all intents and purposes nothing much has changed, in Greece, or anywhere else for that matter.’
‘Strains still remain with record unemployment, sluggish growth as well as low or negative inflation, confirmation of which is expected to come later this week from Germany, Italy and Spain.’
Australian Dollar and New Zealand Dollar Exchange Rates Forecast for Greek Movement
Meanwhile the Australian Dollar to Euro (AUD/EUR) and New Zealand Dollar to Euro (NZD/EUR) exchange rates were offered some strength in Monday’s Oceanic session as hopes that a Greek deal will be struck remained high.
Currency expert Kathy Lien commented: ‘The Australian Dollar and New Zealand Dollars ticked higher as risk appetite improved. We have long been optimistic that an extension will be made and we still believe that both parties will reach an agreement to restructure Greek debt.’
‘Greek headlines will continue to affect how the Euro and other major currencies trade in the coming week.’
However, the New Zealand Dollar may be in for dramatic swings on Tuesday when the Reserve Bank of New Zealand (RBNZ) releases its Two-Year Inflation Expectation.
The ‘Kiwi’ remained stronger against its ‘Aussie’ counterpart on Monday after New Zealand Credit Card Spending increased by 6.2% on the year in January from December’s 4.5%.
Swiss Franc to Euro (CHF/EUR) Exchange Rate Drops on Greek Extension
The Swiss Franc dropped to near a five-week low against the Euro on Monday after Greece’s austerity programme extension was granted. The uncertainty regarding Greece’s bailout request had offered the Swiss Franc to Euro (CHF/EUR) exchange rate the ability to gain.
The Swiss KOF Leading Indicator will be published on Friday and is expected to shrink in February from 97 to 89—however, if the data fails to fall as much as forecast, the Swiss Franc could be offered some support.
Bank of Japan (BOJ) Policymakers Doubt 2.0% Inflation Target can be Met
The Bank of Japan (BOJ) released meeting minutes on Sunday which showed three policymakers doubt if the inflation target can be feasibly met.
While other policymakers believe that inflation within the Japanese economy will be able to fudge its way higher to meet the 2.0% target, three others are suggesting a collapse of oil prices will weigh heavily on already weak inflationary levels.
The recent tumble in oil prices has seen many central banks adopt a dovish tone and some institutions have resorted to rate cuts.
Bank of Canada (BOC) Rate Cut Speculation to Heighten on Thursday’s Inflation Figures
The Bank of Canada (BOC) has been one such bank to cut interest rates on account of low inflation—oil is Canada’s largest export.
However, some economists forecast further declines in commodity currencies such as the Canadian Dollar, Australian Dollar and New Zealand Dollar.
Foreign exchange strategist Todd Elmer commented: ‘There are lots of different ways to look at currency valuation and by any of those measures, given the fact that the ‘Aussie’, ‘Kiwi’ and Canada Dollars have declined against the US Dollar it’s fair to say that they are less overvalued but the likelihood is we continue to see pressure.’
The end of the week will see speculation surrounding further BOC rate cuts heighten as Canada releases its Consumer Price Indexes (CPI).
US Dollar (USD) Exchange Rate Awaits Fed’s Yellen Speech
Meanwhile, the US Dollar could be in for fluctuations on Tuesday and Wednesday when Federal Reserve chief Janet Yellen testifies before the US Senate and House.
Any mention of rate hikes could impact the US Dollar dramatically after January’s Fed minutes suggested that the central bank was less enthusiastic about hiking rates than previously suggested—again, a result of lower inflation.
Euro Exchange Rate Forecast: EUR/CAD, EUR/AUD, EUR/NZD, EUR/CHF, EUR/JPY
The Euro had a mixed bag of data results on Monday when the IFO German Business Climate and Expectations Surveys both recorded below- forecast gains in February. In addition, the IFO German Current Assessment Survey shrank from 111.7 to 111.3 rather than climbing to 112.5 as predicted.
The Euro could be in for some choppy trading on Thursday when the German Unemployment Rate and Unemployment Change stats emerge.
However, it’s likely that Greek negotiations will continue to affect Euro trading throughout the week.
The European Parliament Economic Affairs committee stated: ‘The state of play in Eurogroup talks with Greece is set to dominate the Economic and Monetary Affairs Committee’s regular debate on Eurozone economic indicators with European President Jeroen Dijsselbloem.’
The Euro to Canadian Dollar (EUR/CAD) exchange rate resides at 1.4238. The Euro to Australian Dollar (EUR/AUD) exchange rate is trading in the region of 1.4521. The Euro to New Zealand Dollar (EUR/NZD) exchange rate is reaching 1.5080. The Euro to Japanese Yen (EUR/JPY) exchange rate hovers at 134.9500. The Euro to Swiss Franc (EUR/CHF) exchange rate is trending in the region of 1.0754.