EUR/AUD Exchange Rate Forecast to Trend Lower despite Positive Eurozone Retail Sales Growth
The Euro to Australian Dollar (EUR/AUD) exchange rate declined by around -0.6% on Thursday afternoon.
The single currency edged higher versus most of its major peers today thanks to a combination of positive domestic data results and US Dollar weakness. After labour market data in the US failed to impress, exaggerating concerns that the Federal Reserve will hold off from tightening policy for a considerable time to come, negative correlation caused the Euro to climb as the US Dollar declined.
Also supporting demand for the common currency today was positive domestic data. January’s Eurozone Retail Sales were forecast to advance by 1.3% on the year, but sales growth actually reached 2.0%.
‘Consumers perhaps offer the Eurozone the best hope for growth at the moment – the fundamentals still look reasonable for consumer spending in the Eurozone with deflation/negligible inflation boosting purchasing power and labour markets generally improved,’ said Howard Archer, economist at IHS Global Insight.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4822.
AUD/EUR Exchange Rate Forecast to Strengthen after China’s Services Output Remained- in Growth Territory
After China’s Services PMI managed to avoid dropping into contraction territory, Asian stock values rose. This caused heightened demand for high-yielding assets, with the Australian Dollar gaining versus most of its major peers.
Also supporting demand for the ‘Aussie’ (AUD) was positive domestic data. January’s Trade Balance was forecast to show that the deficit narrowed from -3524 million to -3200 million, but the actual result narrowed further to -2937 million.
AUD overvaluation remains a persistent concern, however, with Federal Reserve inaction presenting additional upside risks for the South Pacific asset.
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.4815 during Thursday’s European session.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast: Australian Retail Sales to Provoke Volatility
Given that Australia is moving away from a mining and export-based economy, consumer spending has become far more important. Therefore, Friday’s Retail Sales data for January is likely to cause AUD volatility.
The German and Eurozone Retail PMIs will also be likely to impact the EUR/AUD exchange rate. US Dollar positioning will be significant as both the Euro and the Australian Dollar stand to gain if the US Dollar extends losses.
The Euro to Australian Dollar (EUR/AUD) exchange rate reached a high of 1.4926 during Thursday’s European session.