The Euro to Australian Dollar (EUR/AUD) exchange rate declined in the first half of Wednesday’s European trading after making significant gains on Tuesday from the Reserve Bank of Australia’s (RBA) surprise interest rate cut.
However, the release of better-than-forecast Eurozone Retail Sales figures could pull the Eurozone higher over the remainder of the session. Retail Sales showed 0.3% growth in December, allowing the annual figure to jump from 1.5% to 2.8%. Economists had forecast a smaller increase to 2.0%.
Eurostat commented: ‘The 0.3% increase in the volume of retail trade in the Euro area in December 2014, compared with November 2014 is due to rises of 0.4% for automotive fuel and of 0.3% for both the non-food sector and for “Food, drinks and tobacco.”’
Meanwhile, the final French Services and Composite Purchasing Managers Indexes fell below flash predictions while the gauges for Germany, Italy and the Eurozone all printed better than initially forecast.
The Eurozone’s service-sector growth has now officially hit its fastest pace in six months. The Services PMI reached 54.0 while the Composite measure rose to 52.7.
Markit stated: ‘The Eurozone enjoyed a positive start to 2015, as growth of economic activity accelerated for the second month running to its highest since July last year. Among the big-four nations, output expanded in Germany, Italy and Spain, but the downturn in the French economy extended into its ninth month.’
Wednesday saw Australian National Australia Bank (NAB) Business Confidence fall in the fourth quarter of 2014 from 6 to 2.
The falling Australian Dollar exchange rate is thought to be the cause of denting confidence as it affects companies that import.
NAB stated: ‘Industries with high import costs, such as wholesale, reported a larger impact. The biggest positive changes occurred in mining as depreciations helps to cushion the impact of sharp falls in commodity prices. Hedging remains the most common means of managing currency risk.’
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast
The Euro to Australian Dollar (EUR/AUD) exchange rate could fluctuate on the release of Australia’s HIA New Home Sales and Retail Sales ecostats, out on Thursday. In addition, German Factory Orders, Construction PMI and Eurozone Retail PMI will also be published and could make for an interesting day for Australian Dollar to Euro (AUD/EUR) exchange rate trading.
European Central Bank (ECB) officials will also be speaking throughout the day and the tone of their remarks could impact the Euro.
The Euro to Australian Dollar (EUR/AUD) exchange rate is presently trending in the region of 1.4703. The Australian Dollar to Euro (AUD/EUR) exchange rate is residing at 0.6804.