Eurozone Growth and Inflation Stats to Influence Euro to Australian Dollar Exchange Rate
Despite some seemingly hawkish comments from European Central Bank (ECB) President Mario Draghi last week, the Euro to Australian Dollar (EUR/AUD) exchange rate only saw modest gains as investors await this week’s major ecostats.
After opening last week at the level of 1.5274, EUR/AUD briefly surged higher before closing the week near just 1.5315. On Monday, the pair remained near the level of 1.53.
The pair’s lack of movement on Monday was partially due to market anticipation for key data due in the coming days.
Investors hesitated to make any big moves on the Euro (EUR) ahead of Tuesday’s Eurozone Gross Domestic Product (GDP) data from Q4 and Consumer Price Index (CPI) data from January.
A lack of lasting demand for risk-correlated currencies like the Australian Dollar (AUD) has left the ‘Aussie’ limp on Monday too.
Australian Dollar (AUD) Exchange Rates Weighed as Risk-Sentiment Fades
The Australian Dollar saw a surge in demand towards the end of last week, which caused the Euro to Australian Dollar (EUR/AUD) exchange rate to fall from the one-month-high of 1.5488 seen on Thursday.
Investors found risk-correlated currencies like the Australian Dollar more appealing on Friday evening, as the World Economic Forum (WEF) in Davos ended without the US Presidential administration further ramping up its protectionist rhetoric.
However, ultimately the US did not play down its previous threats of trade protectionism much either, which meant the risk-rally was limited and left the Australian Dollar relatively limp on Monday.
On top of this, the ‘safe haven’ US Dollar (USD) was bought up from its recent lows on Monday which further pressured Australian Dollar trade.
Euro (EUR) Remains Appealing Following European Central Bank (ECB) Meeting
While the Euro to Australian Dollar (EUR/AUD) exchange rate has fallen from its monthly highs, the Euro outlook was still boosted by last week’s European Central Bank (ECB) policy decision.
The bank left monetary policy frozen as expected, but ECB President Mario Draghi’s latest press conference was perceived as surprisingly hawkish.
Draghi acknowledged that the Eurozone’s economy was growing at a faster pace than expected. He also expected that Eurozone inflation would remain steady in the coming months, which was a more optimistic tone on domestic price pressures than the one seen in late 2017.
While ECB officials still insist that quantitative easing (QE) could remain in place for as long as necessary, the Euro has been more appealing on hopes that the bank could tighten monetary policy sooner than expected if the economy continues to perform strongly.
Euro to Australian Dollar (EUR/AUD) Forecast: Eurozone and Australian Inflation Results Ahead
The Euro to Australian Dollar (EUR/AUD) exchange rate could see some significant movement in the coming days, with major data due for publication.
Tuesday will see the publication of NAB’s Australian business confidence survey for December, as well as January confidence and Q4 Gross Domestic Product (GDP) projections for the Eurozone.
Eurozone growth is forecast to have remained at 0.6% quarter-on-quarter and 2.6% year-on-year. If Eurozone growth has been strong – or even stronger than expected – the Euro to Australian Dollar outlook could rise.
Wednesday will be a key session too, as Australia’s Q4 Consumer Price Index (CPI) report will be published as well as the Eurozone’s own inflation stats from January.
Inflation is likely to have the biggest potential influence on the Euro to Australian Dollar exchange rate in the coming week, as surprising inflation results are likely to influence central bank speculation.
