The Euro to Australian Dollar (EUR/AUD) exchange rate advanced by around 0.35% on Tuesday morning.
Although many analysts predicted that Greece would default on the €750 million repayment to the International Monetary Fund (IMF), the cash-strapped nation managed to pay off the whole sum earlier-than-expected. This has seen the shared currency strengthen versus its major peers. However, the advance was somewhat tapered after the Greek Finance Minister stated that the nation would run out of money in two weeks time.
The Australian Dollar, meanwhile, strengthened versus the majority of its most traded currency rivals on Tuesday. This can be attributed to the combination of positive domestic data and improved market sentiment after Greece repaid the IMF. Additional gains can be linked to rising iron ore prices which rallied in response to the China rate cut.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4168.
Despite the Fact that Greece is Running Out of Cash, the Euro (EUR) Exchange Rate is Forecast to Strengthen versus the Pound Sterling and US Dollar
The surprise move by Athens to repay the IMF in full and earlier than was required caused the shared currency to spike. The repayment solidified the view that the anti-austerity government are still doing their utmost to remain part of the Eurozone. However, there is still al long way to go before Greece can secure the bailout funds it so desperately needs.
‘More detailed plans have been put on the table, more figures and data, so gradually we are getting somewhere. But on some of the major issues, there is still work to do. (For example on) some of the major reforms which are obviously not very popular measures but are necessary to put Greece on a sustainable footing, and back on a sustainable track,’ Jeroen Dijsselbloem, the head of the Eurogroup, told CNBC.
According to Greek Finance Minister, Yanis Varoufakis, the debt-riddled nation now only has enough money to survive two weeks. ‘The liquidity issue is a terribly urgent issue. It’s common knowledge, let’s not beat around the bush,’ Mr Varoufakis told reporters in Brussels. ‘From the perspective [of timing], we are talking about the next couple of weeks.’
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.4071 today.
Australian Dollar (AUD) Exchange Rate Forecast to Rally versus the Euro and US Dollar as Iron Ore Prices Soar
After the People’s Bank of China (PBoC) eased policy, the ‘Aussie’ softened versus its major competitors. However, the rate cuts stoked demand for iron ore which saw the Oceanic currency recover those losses versus most of its major rivals. ‘The rally is taking place during the early stages of a long bear market that in our view is set to last well into the next decade,’ analysts Christian Lelong and Amber Cai said in a report, according to Bloomberg. ‘Market fundamentals will reassert themselves sooner rather than later,’ they added, suggesting investors ‘consider this as a window to take short positions.’
Aiding the ‘Aussie’ uptrend was positive domestic data. March’s Home Loans were forecast to have increased by 1.0%, but the actual result advanced by 1.6%. In addition, the ANZ Roy Morgan Weekly Consumer Confidence Index ticked higher from 108.7 to 110.6.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Gains despite Uncertainty Regarding Greece’s Future
With an absence of domestic data to curb the trend, and with improved sentiment towards Greece after managing the IMF repayment, the Euro to Australian Dollar (EUR/AUD) could hold gains for the remainder of Tuesday’s European session.
Wednesday is likely to see significant EUR/AUD volatility with German and Eurozone growth data due for publication.
The Euro to Australian Dollar (EUR/AUD) exchange rate climbed to a high of 1.4171 today.