Uneventful RBA Meeting leaves EUR/AUD Steady
The Euro Australian Dollar (EUR/AUD) exchange rate is trading in a narrow range this morning in the wake of the Reserve Bank of Australia’s (RBA) latest policy meeting.
At the time of writing EUR/AUD is holding close to this morning’s opening levels, in the wake of the RBA’s latest rate decision.
Australian Dollar (AUD) Muted as RBA Leaves Policy Unchanged
The Australian Dollar is showing limited movement in currency markets this morning as investors mull over the RBA’s latest policy meeting.
It came to no surprise to markets that the RBA chose to leave rates on hold at 1.5% again in March, the 19th consecutive month without any alteration from the bank.
There also appeared to be little sign that policy makers are in any rush to change this as well, with observers suggesting it was largely a cut and paste statement again this month as it read;
‘Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.’
However of possible note is the change in language used by the RBA in its outlook for economic growth this year.
While the bank previously forecast that growth would ‘average a bit above 3% over the next couple of years’ it is now suggesting that GDP will now only grow ‘faster in 2018 than it did in 2017’.
With current expectations suggesting that growth in 2017 will only reach 2.5%, this leaves a large gulf between previous forecasts.
Euro (EUR) Stable as Markets Gear up for ECB Meeting
Meanwhile the Euro is showing little signs of movement this morning as investors await European Central Bank’s (ECB) own rate decision later this week.
Markets are hopeful that the publication of the ECB’s latest economic assessment for the Eurozone could led the bank to strike a more hawkish tone, particularly in regard to winding down its stimulus programme.
However analysts warns that the bank is likely to maintain its slow taper of QE in order to avoid unsettling markets.
Peter Chatwell, head of euro rates strategy at Mizuho said;
‘The ECB is going to be presenting growth forecasts that are likely to be stronger, but will be at pains to stress that the move away from monetary easing will be delicately done and slowly.’
EUR/AUD Forecast: Possible Dip in GDP to Weaken the ‘Aussie’?
Looking ahead, the EUR/AUD exchange rate may strike higher in overnight trade today as Australia publishes its latest GDP figures.
While most economists forecast that growth will have held at a subdued 0.6% in the fourth quarter, some fear that there remains a risk that the pace of expansion may have slowed more than expected.
Meanwhile the Eurozone’s will also release its own GDP on Wednesday, with the latest estimate expected to confirm that growth held steady at 0.6%.