The Euro to Australian Dollar (EUR/AUD) exchange rate was trading +1.65% higher in the early part of Thursday’s European session while the Euro to New Zealand Dollar (EUR/NZD) exchange rate was trending +0.75% higher after Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ) rate cut prospects popped the ‘Aussie’ and ‘Kiwi’ bubbles.
Both Trans Tasman currencies have felt the impact of interest rate speculation in recent months; especially since the RBA made a surprise cut to the official cash rate earlier in the year. However, the RBNZ had been rather steady in its stance, suggesting that instead of the rate increases it previously suggested would occur, a period of stability would be more likely.
Euro to New Zealand Dollar (EUR/NZD) Exchange Rate Forecast
However, as New Zealand’s economic recovery slows and the nation’s largest export (dairy) fails to rise considerably, the central bank has left the door open to rate cuts.
RBNZ Governor Graeme Wheeler stated: ‘The bank expects to keep monetary policy stimulatory and is not currently considering any increase in interest rates. It would be appropriate to lower the OCR [official cash rate] if demand weakens and wage and price-setting outcomes settle at levels lower than is consistent with the inflation target.’
Furthermore, the RBNZ jawboned the currency in an attempt to create a more desirable level for the New Zealand Dollar (NZD) exchange rate.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast
Meanwhile, the Australian Dollar (AUD) could be in for a rally if the RBA fails to cut interest rates next week. A sudden surge in the Australian Dollar (AUD) exchange rate could be a negative turn for exporters who have struggled with the resiliently high ‘Aussie’ for some time.
Deutsche Bank currency strategist David Plank commented: ‘If the RBA does not cut rates next week, it risks sending the Australian Dollar as high as US85c.’
Furthermore, the RBA may find it difficult to contain the Australian Dollar (AUD) exchange rate without aggressively asserting its easing bias; even with suggestions for rate cuts, investors could ignore the RBA comments and cause a surge in the ‘Aussie’ commodity currency anyway.
Plank continued: ‘It is going to be difficult for them to do that having not cut for three months in a row. A temporary lift in the ‘Aussie’ Dollar to such levels is certainly possible; particularly as large ‘Aussie’ Dollar short positions are unwound.’
Euro to Australian Dollar (EUR/AUD), Euro to New Zealand Dollar (EUR/NZD) Exchange Rate Forecast
The Euro (EUR) climbed against other majors during Thursday’s European trading after a mixed bag of Eurozone data emerged. The annual German Retail Sales figure managed to climb from a negatively revised 3.3% to 3.5% in March, offering the Euro (EUR) exchange rate some early support.
However, German Unemployment Change data disappointed by coming in at only -8K in April, rather than the -15K forecast. The German Unemployment Rate remained at 6.4% on the year in April.
The Eurozone Consumer Price Index managed to climb from the depths of contraction at -0.1% to 0.0% on the year in April, while the core measure remained at 0.6%.
Eurozone GDP growth may well have picked up to 0.5% quarter-on-quarter in first quarter given improved growth in Spain, Belgium & Austria
— Howard Archer (@HowardArcherUK) April 30, 2015
With no further Eurozone domestic data due out in the rest of the week, the Euro to Australian Dollar (EUR/AUD) and Euro to New Zealand Dollar (EUR/NZD) exchange rates are likely to fluctuate on any developments between Greece and its creditors.
The nation’s slow progress in securing a more favourable austerity package has led to considerable Euro (EUR) depreciation in recent months.
The Euro to New Zealand Dollar (EUR/NZD) exchange rate is trading at 1.4843. The Euro to Australian Dollar (EUR/AUD) exchange rate is trending in the region of 1.4270.