The Euro to Australian Dollar (EUR/AUD) exchange rate and Euro to New Zealand Dollar (EUR/NZD) exchange rate advanced strongly on Monday after the Trans-Tasman currencies were battered by dire trade balance data out of China.
The Euro to Australian Dollar (EUR/AUD) Exchange Rate Hit A Session High of 1.3975
The Trans-Tasman currencies received a beating after data released by the Chinese Administration of Customs Data showed that Chinese exports tumbled by 15% on an annual basis in March and imports fell sharply by 12.7%. The report reflects the sharp declines in the price of commodities such as iron ore and weaker global demand.
Since the start of the year, Australia’s most exported commodity of iron ore has seen its value drop by more than 30% as new supplies swamped the market and forced prices to slide to half of what they were in 2014.
Adding to the pressure on the ‘Aussie’, the World Bank cut its 2015 growth forecasts for the East Asia region and China.
‘All of that provides quite a negative picture for the Aussie, particularly as the data we had overnight was very much driven by a decline in exports, which is going to be seen as quite a negative factor for the region,’ said Ian Stannard, the head of European FX strategy at Morgan Stanley.
New Zealand Dollar (NZD) Exchange Rate Forecast To Gain Against Euro (EUR) Long Term
Over the weekend, the New Zealand Dollar rose to a fresh record high against the Euro and investors are forecasting more gains over the long term as the strength of the New Zealand economy contrasts with the weakness of the Eurozone. After the release of the Chinese data, however the ‘Kiwi’ softened. The losses are forecast to be short-lived.
‘The Euro is a dog. They have bugger all growth, bugger all inflation, massively high unemployment, stupendously high youth unemployment and a central bank that has finally spat the dummy and turned on the printing presses with considerable gusto. Barring a massive New Zealand-based disaster that sends the New Zealand Dollar massively down, it’s difficult to see the ‘Kiwi’ going down,’ said Peter Cavanaugh, from Bancorp Treasury Services.
Both of the Trans Tasman currencies will experience further movement on Wednesday due to the release of Chinese first quarter Gross Domestic Product (GDP) data. A weaker than forecast report will likely allow the Euro to move higher, albeit only temporarily.
Market attention will now focus on upcoming Eurozone industrial production data due on Tuesday and Wednesday’s European Central Bank (ECB) interest rate decision.