Homepage » News » EUR/AUD » Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast: Geopolitics to Influence Movement this Week

Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast: Geopolitics to Influence Movement this Week

The Euro to Australian Dollar (EUR/AUD) exchange rate forecast is to be influenced by events in Greece and Ukraine next week, volatility is to be expected.

At the end of last week, the Australian Dollar made gains against the Euro as the Reserve Bank of Australia cut its growth forecasts by a smaller margin than economists had feared.

The ‘Aussie’ also found support as some investors speculated that the currency’s recent sharp declines have been overdone.

‘As a currency trader you always bet against the country that’s most desperate in its attempts to stimulate its economy. In Europe, I see this desperation, but I can’t see this in Australia,’ said industry expert Jefferey Sica.

The single currency meanwhile fell as industrial production data out of Germany, Spain disappointed the markets, and as ongoing jitters over Greece’s bailout renegotiation continued.

Looking to the week ahead the currency pairs movements will be heavily influenced by the Greek situation and the conflict in Ukraine.

Ukraine Conflict Could Escalate

French President Francois Hollande and German Chancellor Angela Merkel held talks in Moscow aimed at brokering a ceasefire in the conflict in eastern Ukraine, which has claimed 5,400 lives.

Some 1.2 million Ukrainians have fled their homes since last April, when the rebels seized a big swathe of the Luhansk and Donetsk regions following Russia’s annexation of Crimea.

With the USA considering sending weapons to the Ukrainian government, fears are growing that unless a ceasefire is negotiated the conflict could devolve into what some will consider a proxy war between the West and Russia.

Australian Political Infighting could affect ‘Aussie’

The Australian Dollar meanwhile could be affected by political uncertainty in Australia. Prime Minister Tony Abbott could be removed from office as early as next week after facing a revolution from members of his own political party. MP’s from Abbots Liberal party are calling for a motion to have the leadership declared open.

‘We are not going to repeat the chaos and instability of the Labour years. I have spoken to the deputy leader Julie Bishop and we will stand together in urging the party room to defeat this particular motion,’ said Abbot in a press conference.

If Abbot is removed, the political uncertainty created will inevitably have an impact upon the Australian Dollar.

The main data releases that will influence the EUR/AUD exchange will be Thursday’s Australian unemployment data and Friday’s Eurozone Gross Domestic Product reports.

The Australian Dollar could find support from the release of Westpac Consumer confidence data on Tuesday.

Economists will also be watching out for inflation data from Portugal and other Eurozone members for clues as to whether deflation has taken root across the region.