With sentiment towards the single currency still negative thanks to financial-crisis rhetoric, the Euro has struggled to strengthen on Monday. Both the ‘Aussie’ (AUD) and the ‘Kiwi’ (NZD) have been bolstered by a decision from the People’s Bank of China to increase stimulus measures.
The Euro to Australian Dollar exchange rate is currently trending in the region of 1.4558.
The Euro to New Zealand Dollar exchange rate is currently trending in the region of 1.6060.
Over the past month or so the Euro has generally depreciated under the weight of economic stagnation, and fears of a financial-crisis have compounded negative trader sentiment towards the single currency. With European Central Bank President Mario Draghi willing to do whatever it takes to spur economic recovery, the likelihood of additional stimulus measures has pared Euro gains.
Both the Australian Dollar and New Zealand Dollar have softened considerably over the past month or so under cautious trading. Heightened fears over the slow pace of the global economic recovery, mounting geopolitical tensions regarding the Ebola virus and huge price cuts to commodities have weighed heavily on the South Pacific currencies.
The Euro to Australian Dollar exchange rate has tumbled to a low today of 1.4528.
The Euro to New Zealand Dollar exchange rate has fallen to a low today of 1.6035.
Despite anxieties over the possibility of a European financial-crisis, the single currency has gained a little momentum against some of its major peers on Monday. This can be attributed to a move by the European Central Bank to monitor lenders’ books in an attempt to discourage bad loans.
Nicholas Comfort, writing for Bloomberg, reported; ‘ECB President Mario Draghi is using the yearlong review to restore confidence in the financial system before taking over banking supervision in November […]Draghi told lawmakers in Brussels last month that while the ECB’s exercise probably worsened Europe’s credit contraction as firms prepared for the exams, banks would be better able to boost lending when the cleanup was complete.
China’s central bank is preparing to inject around 200 billion Yuan worth of three-month loans into several banks to bolster liquidity and prop up the slowing Chinese economy. This has resulted in a surge for both the Australian Dollar and New Zealand Dollar.
‘Aussie’ gains have been somewhat stymied, however, by the potential for further cuts to the price of iron ore. ‘Iron ore prices have collapsed,’ Moody’s ratings agency asserted in a recent report. ‘With slowing global steel-production growth rates, iron ore prices remain vulnerable to the downside and we expect continued volatility.’
The New Zealand Dollar has performed better on Monday compared to its South Pacific counterpart as a result of a slight increase in the Performance Services Index. However, a decline in consumer confidence has weighed on the pace of the appreciation.
The Euro to Australian Dollar and New Zealand Dollar Exchange Rates Forecast to Hold
With several important Chinese domestic data publications on Tuesday the EUR/AUD/NZD exchange rate is likely to hold prior to the results. Those invested in either the ‘Aussie’ or the ‘Kiwi’ will be most interested in the Yearly Chinese Industrial Production data which is forecast to strengthen.
A singular European domestic data publication on Tuesday (Eurozone Government Debt-GDP Ratio) is unlikely to provoke much volatility for the single currency.