- EUR Exchange Rates Climb – Traders take advantage of low trade weight
- ‘Aussie’ (AUD) Mixed – Improved Fed rate hike bets weigh
- European Shares Surge – Commodities recover
- EUR/AUD Forecast to Hold Gains – Lack of data to provoke changes
Euro (EUR) Exchange Rate Ticks Higher after Eurozone Current Account Surplus Widened
In recent weeks the Euro has struggled to hold ground, sustaining a marked downtrend versus its most traded rivals. The depreciation has been the result of a combination of ‘Brexit’ uncertainty, speculation of policy easing from the European Central Bank (ECB) and renewed optimism regarding a near-term Federal Reserve cash rate increase.
On Friday, however, the single currency strengthened versus the majority of its closest competitors. The appreciation can be linked to traders taking advantage of the comparatively low trade weighting.
Domestic data also supported Euro gains. March’s Eurozone Current Account surplus widened from 19.2 billion Euros to 27.3 billion Euros on a seasonally adjusted basis. On a non-seasonally adjusted basis the Eurozone Current Account surplus also widened, gaining from €11.2 billion to €32.3 billion.
Additional Euro gains today can be linked to surging European stick values.
‘After the losses of the last few days, bargain hunters are re-entering the market,’ said Frankfurt-based trader Thorsten Engelmann. ‘The market seems to be able to deal with the Fed raising rates, and next week should be quieter now that the earnings season is over.’
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5520.
Australian Dollar (AUD) Exchange Rates Mixed as Commodities Surge, Fed Rate Hike Bets Improve
The ‘Aussie’ (AUD) endured a mixed-faring versus its rivals on Friday as risk-appetite improved, but the prospect of a near-term Fed rate hike limited AUD appeal. With an absence of domestic data to provoke changes, the Australian Dollar is likely to continue to see volatility in response to US Dollar strength and risk-appetite.
US Existing Home Sales, due for publication later during the North American session, may impact on the Australian Dollar.
Reserve Bank of Australia (RBA) policymaker John Edwards caused near-term ‘Aussie’ appreciation after stating that the central bank is in no rush to cut rates.
‘It is certainly right to say that, at this point it is below target,’ stated Edwards. ‘But then it has never been the view that the target had to be achieved each and every quarter, or for that matter each and every couple of quarters, or year for that matter. The target exists, and I think it will be desirable to return over time to the midpoint of the target, but I don’t think it can be done urgently.’
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.5465 during Friday’s European session.
EUR/AUD Exchange Rate Forecast: RBA Governor Stevens Speech in Focus
There will be a number of ecostats over the coming week with potential to cause EUR/AUD exchange rate volatility. Of particular significance will be a speech from RBA Governor Glenn Stevens. If the central bank chief contradicts Edwards’ views that the RBA is in no rush to cut rates, the ‘Aussie’ will likely dive.
In terms of European ecostats, German IFO and ZEW reports will likely have the greatest influence over Euro movement.
There will also be several US ecostats over the coming week which have potential to cause EUR/AUD changes, not least as the Fed have recently stated that policy will be data-dependent. US Durable Goods Orders and Annualised Gross Domestic Product will be most likely to provoke market volatility.
The Euro to Australian Dollar (EUR/AUD) exchange rate reached a high of 1.5538 during Friday’s European session.