The Euro to Australian Dollar (EUR/AUD) exchange rate is trending within a tight range on Friday morning.
The shared currency is generally trending lower versus many of its peers after disappointing German retail sales seeing dampened demand, particularly with mounting speculation that the European Central Bank will stimulate economic recovery in the near-future. The Australian Dollar, meanwhile, declined against most of its major peers after China’s Producer Price Index softened beyond expectations.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4557.
This is due to traders flocking to safe-haven assets and causing a rise in gold prices supporting ‘Aussie’ (AUD) gains. In addition, better-than-expected data out of China aided an Australian Dollar uptrend. The Pound, meanwhile, slumped versus nearly all of its major peers after domestic data failed to meet with forecast figures.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4700.
Euro (EUR) Exchange Rate Trending Lower on Greek Situation
Although European data contained some positive aspects, with particular reference to French consumer confidence, the shared currency is still trending lower against most of its major peers. This is as a result of continued speculation that the European Central Bank (ECB) will be loosening monetary policy in the near-future.
In addition to policy divergence acting as a Euro anchor, the current Greek political situation is also causing diminished demand for the Euro. However, it is fair to say that some investors predict a stronger shared currency if Greek were to leave the Eurozone.
‘We are past the days when we still have to rescue Greece,’ said Michael Fuchs, the parliamentary leader of Mrs Merkel’s Christian Democrats. ‘The situation has completely changed. It is entirely different from three years ago when we didn’t have the backstop defences in place. Greece is no longer ‘systemically relevant’ for the Euro.’ He also added that the common currency might actually strengthen without the Balkan troublemaker.
Australian Dollar (AUD) Exchange Rate Strengthens on Gold Prices
With risk-aversion strategies rife amid declination in oil prices and the Greek political tensions, demand for safe-haven assets, such as gold, has increased exponentially. With gold prices closely linked to the Australian economy, the ‘Aussie’ (AUD) enjoyed a surge on Tuesday.
To compound the ‘Aussie’ gains was better-than-expected data out of China. The Services PMI ticked higher from 53 to 53.4, and the Composite PMI increased from 51.1 to 51.4.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Trend Higher
Given that it seems we are no closer to moving away from risk-aversion in the currency market, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to continue trending lower. With that being said, however, the Australian Performance of Service Index due for publication late on Tuesday evening has the potential to provoke volatility.
The Euro to Australian Dollar (EUR/AUD) exchange rate reached a high today of 1.4634