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Euro to Australian Dollar (EUR/AUD) Recovers in Risk-Off Environment


With yesterday’s disappointing economic reports for the US and Eurozone dampening demand for higher-risk assets, the Australian Dollar pared this week’s gain against the Euro.

Earlier in the week the ‘Aussie’ was trending higher against its European rival as the increasing odds of the European Central Bank introducing additional stimulus left the Euro floundering.

Yesterday the common currency broadly extended declines as growth reports for the 18-nation currency bloc and several of its largest economies fell short of forecasts.

Although the German economy expanded by more-than-anticipated in the first quarter, the French economy stagnated and both Italy and the Netherlands posted contraction.

Consequently, the Eurozone’s economy expanded by just 0.2 per cent in the first three months of the year – half the 0.4 per cent growth projected.

The dismal growth reports left the Euro struggling.

During North American trading a mixed bag of economic reports for the US added to the slightly dimmer view of the global economy and it was the turn of higher-risk currencies like the Australian Dollar to falter. While US initial jobless claims dropped to a seven-year low, industrial production in the world’s largest economy unexpectedly declined.

As asserted by industry expert Mark Johnson; ‘The Australian Dollar rallied a little bit overnight then came off, probably caught up with the risk aversion tone. Equity markets came off and the risky currencies like the Kiwi and Aussie sold off too. We had a weaker GDP print and the European Central Bank (ECB) downgraded its forecasts.’

The ‘Aussie’ softened against the Euro, US Dollar and Pound during Australasian trading.

The asset was also feeling the lingering effects of this week’s federal budget. The Australian budget outlined harsh spending cuts and hinted at the potential loss of thousands of jobs, reducing the odds of the Reserve Bank of Australia introducing an interest rate hike in the months ahead.

Today’s Eurozone trade balance data could have an impact on the Euro to AUD pairing before the weekend.

Investors will also be taking an interest in US building permits/housing starts reports as well as the University of Michigan Confidence index.

Next week volatility in the Euro to Australian Dollar exchange rate could occur as a result of Eurozone construction output figures, Australia’s conference board leading index, German producer prices, Australian consumer confidence, China’s HSBC manufacturing PMI and German GDP.

Euro (EUR) Exchange Rates

[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate , 
Euro,,US Dollar,1.3716,
Euro,,British Pound,0.8168,
Euro,,Australian Dollar,1.4678,
Euro,,New Zealand Dollar,1.5900,
Euro,,Canadian Dollar,1.4927,

As of 09:40 GMT