The Euro to Australian Dollar (EUR/AUD) exchange rate dived by around -1.00% on Wednesday morning.
An informal meeting between Greek Prime Minister Alexis Tsipras, German Chancellor Angela Merkel and French President Francois Hollande was set to discuss the most recent reform proposal submitted by Athens. However, rumours have surfaced that the meeting will not take place. This has caused the shared currency to dive versus many of its closest rivals.
The Australian Dollar, meanwhile, rallied versus many of its currency competitors thanks to a bearish US Dollar. Additional gains can be attributed to a rise in gold and iron ore prices. Relatively poor domestic data publications weren’t enough to prevent the ‘Aussie’ (AUD) appreciation.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4565.
Euro (EUR) Exchange Rate Forecast to Trend Lower against the ‘Aussie’ ahead of Brussels Summit
Although the Summit in Brussels is not supposed to be a meeting to decide on how to deal with Greece’s mounting issues, many economists predict that it will be dominated by Greek geopolitics. However, most agree that there is unlikely to be any significant progress made with Greece’s new reform package still awaiting feedback. There was supposed to be an informal meeting between the heads of Greece, France and Germany this evening, but rumours have since surfaced that the meeting won’t take place.
Adding to the Euro downtrend were comments from Michael Fuchs, an influential member of Angela Merkel’s CDU party. Fuchs criticised the latest Greek proposal as ‘not serious’. Many expect little progress to be made even if the informal meeting does take place.
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.4545 today.
Australian Dollar (AUD) Exchange Rate Forecast to Rally versus the Shared Currency on US Dollar Weakness
Having dived amid issues surrounding the Federal Reserve, the US Dollar weakness saw risk-appetite improve significantly. This saw heightened demand for the high-yielding Australian Dollar despite producing relatively poor results from domestic data publications.
The weak US Dollar also encouraged an ‘Aussie’ supportive rise in gold prices. Gold advanced further in response to geopolitical tensions in Europe. ‘Bullion found support from renewed Greek debt concerns,’ said HSBC analyst James Steel. ‘That said, Greek exit concerns have clearly had a less robust impact on gold than during the earlier periods of ‘Grexit’ concerns.’
In addition, iron ore prices rallied to a fresh four-month high amid improved demand from China. ‘[China’s steel sector] has reached an inflection point on the back of an improving supply and demand outlook’ Helen Lau, a Hong Kong-based analyst said. ‘Demand recovery, albeit lacklustre over the short term, will accelerate on the back of ongoing fiscal stimulus and monetary easing policies.’
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Losses on Lack of Data
Although the shared currency is likely to fluctuate as traders await news regarding Greece’s latest set of reforms, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold losses thanks to an absence of further domestic data publications to provoke changes. Although there is a complete absence of European data on Thursday, EUR/AUD volatility is likely thanks to several important Australian economic data publications. Employment Change and Unemployment Rate will be of greatest significance for those invested in the ‘Aussie’.
The Euro to Australian Dollar (EUR/AUD) exchange rate climbed to a high of 1.4770 today.