The Euro to Australian Dollar (EUR/AUD) and Euro to New Zealand Dollar (EUR/NZD) exchange rates declined on Tuesday by -0.20% and -0.25% respectively. This is as a result of mounting speculation that the European Central Bank (ECB) will have to resort to full-blown quantitative easing measures in order to boost growth in the sluggish Eurozone economy. Meanwhile, both South Pacific currencies have appreciated thanks to positive domestic data.
The Euro to Australian Dollar exchange rate is currently trending in the region of 1.4369.
The Euro to New Zealand Dollar exchange rate is currently trending in the region of 1.5976.
Euro (EUR) Softens on QE Bets
Futures traders have sent the common currency trending lower against nearly all of its major peers on Tuesday. This is because speculation is rife that the European Central Bank will have to resort to substantial quantitative easing in order to stimulate growth in the flagging Eurozone economy. After a policy meeting on Thursday, ECB President Mario Draghi said the ground was being prepared for ‘further measures to be implemented, if needed.’
‘We call it peeling the QE onion,’ said Andrew Bosomworth, a senior portfolio manager at Pimco, the world’s largest bond investor. ‘It makes a few members of the Governing Council cry. The ECB is trying all these different tools to prevent deflation, but if they fail, what’s left is only one tool – sovereign QE.’
Australian Dollar (AUD) Strengthened by Business Conditions
Australian economic data printed positively on Tuesday. In particular, a record growth in Business Conditions (from 1 to 13) has allowed the ‘Aussie’ (AUD) to advance against many of its currency rivals.
New Zealand Dollar (NZD) Bolstered by Card Spending
An improvement in card spending has aided the ‘Kiwi’ (NZD) uptrend. Card Spending increased from 0.0% to 1.5%, and Retail Card Spending eclipsed the median market forecast of a growth from 0.1% to 0.5%, with the actual result reaching 1.0%.
EUR/AUD/NZD Exchange Rates Forecast to Strengthen
As the commodities markets declines, with particular reference to iron ore, the South Pacific currencies are likely to depreciate. Any hint of risk-aversion will see the higher-yielding currencies plummet.
However, with demand for the Euro softening amid quantitative easing fears, the single currency is unlikely to rack up any significant gains.
The Euro to Australian Dollar has been trending in a range between 1.4354 and 1.4440.
The Euro to New Zealand Dollar he been trending in a range between 1.5950 and 1.6080.
UPDATE
EUR/AUD Edges Lower, EUR/NZD Plummets
The Euro to Australian Dollar exchange rate is currently trending in the region of 1.4318.
The Euro to New Zealand Dollar exchange rate is currently trending in the region of 1.5873.
Mixed German data has seen the common currency fluctuate against its major peers. The German Wholesale Price Index declined on a monthly basis from 0.1% to -0.6%. On a yearly basis, the German Wholesale Index increased from -0.9% to -0.7%.
Positive Australian data has seen the ‘Aussie’ (AUD) gain against the single currency. The Wage Cost Index met with the forecast and previous figures on both a quarterly and yearly basis. Credit Card Balances declined from A$49.5 billion to A$49.4 billion, but Credit Card Purchases increased from A$22.3 billion to A$23.9 billion.
The New Zealand Dollar has strengthened against all of its major peers on Wednesday morning after Tuesday evening’s release of the Reserve bank of New Zealand Financial Stability Report. The report on the strength of the nation’s financial system reminded traders that the central bank remains in a tightening cycle. ‘He reminded people that we’re still in a tightening cycle when the market was trying to price it all out,’ said Imre Speizer, senior market strategist at Westpac Banking Corp in Auckland. ‘It gave the kiwi a bit of a lift, and you can see that by the pull-back in the Aussie-kiwi (cross rate).’