The Euro to Australian Dollar (EUR/AUD) exchange rate weakened on Thursday after last night’s dovish Federal Reserve policy meeting sent the US Dollar (USD) sliding and commodity based assets climbing.
The Euro to Australian Dollar (EUR/AUD) exchange rate was trading in the range of 1.4619 to 1.4737 Today
The Australian Dollar advanced strongly after the Federal Reserve left interest rates unchanged as expected and policy makers cut their inflation and growth forecasts. The big driver, however, for the ‘Aussie’s’ gains were dovish comments from Fed Chair Janet Yellen.
‘The committee continues to judge that the first increase in the federal funds rate will be appropriate when it has seen further improvement in the labour market and is reasonably confident that inflation will move back to its 2% objective over the medium-term. While the Fed has made considerable progress toward its goal of maximum employment, the committee wants to evidence of some further progress,’ Yellen said.
The comments disappointed economists who had been hoping for a firmer commitment to an interest rate rise occurring in September. Officials still expect a rate hike to occur in 2015, but the timing remains vague. Seven of the seventeen members of the committee now expect either one rate rise or none this year.
After the Fed policy meeting the Australian Dollar advanced against the majority of its major peers, including the US Dollar (USD), Pound (GBP) and Euro.
Greece Crisis Weighs on EUR Exchange Rate, Forecast to Impact Australian Dollar to Euro (AUD/EUR) Trading
Sentiment towards the single currency remains fragile due to the ongoing stalemate between the Greek government and its international creditor’s remains. Time is rapidly running out for a deal to be reached, as the deadline for a repayment to the International Monetary Fund (IMF) approaches. European Finance ministers are gathering in Luxembourg to try and hammer out an agreement.
‘Today’s Eurogroup meeting in Luxembourg has been touted as the ‘last chance saloon’ for Greece to agree a deal in time for the end of June. Regrettably the meeting is likely to come and go without any deal given that Greek officials have refused to submit any fresh proposals, and the Greek Prime Minister is jetting off to Russia to see President Putin, which means we may well get some talks over the weekend,’ said Michael Hewson of CMC Markets.
Depending on what occurs in the Greek talks the Euro could make further losses against the Australian Dollar on Friday.