The Euro Australian Dollar (EUR AUD) exchange rate failed to stabilise close to a two-week high on Thursday as investor risk appetite rose sharply.
Australian Dollar (AUD) Slips as Iron Ore Tumbles
The Australian Dollar initially weakened against the Euro during the Asian session on Thursday following a downturn in commodity prices
Iron ore prices fell for the second consecutive day on Wednesday with spot prices for benchmark 62% fines sliding 1.5% to $72.84 a tonne.
However the ‘Aussie’ was able to mount a recovery during the European session, recouping much of the currency’s overnight losses as risk sentiment rose in the wake of a weakened US Dollar (USD).
USD initially slumped on Thursday as investors appeared unfazed by the possible implementation of the first major US tax reforms in over a decade, with analysts suggesting that the move had already been priced in by markets.
Further denting the US Dollar in the afternoon was the final release of America’s third quarter GDP report, with investors disappointed to see growth revised down to 3.2%, down from previous estimates of 3.3%.
Euro (EUR) Stabilised by Uptick in Eurozone Consumer Confidence
The Euro was able to stem its losses later in the afternoon however as the Eurozone published its latest consumer confidence figures.
According to the flash estimate published by the European Commission the bloc’s sentiment index rose to 0.5% in December, the only positive reading in over a decade after November’s sentiment was revised down from 0.1 to 0.
However the with the flash release not containing any further information investors were left in the dark as to why consumer confidence rose.
Meanwhile the reading for the whole of the European Union saw sentiment rise from -0.7 to -0.6 over the same period.
EUR AUD Forecast: German Consumer Confidence to Rise?
Looking ahead the EUR AUD exchange rate may strengthen on Friday morning as German consumer confidence is expected to rise in January, with economists forecasting that the sentiment index will have risen from 10.7 to 10.8.
Meanwhile the Australian Dollar may struggle to advance over the coming days as a lull in domestic data and thinned trading volumes over the Christmas period leaves the ‘Aussie’ with little momentum to drive movement.
Current Interbank Exchange Rates
At the time of writing the EUR AUD exchange rate was trending around 1.5413 and the AUD EUR exchange rate was trending around 0.6486.
