Euro to Australian Dollar Exchange Rate Higher Despite ‘Aussie’ Rally
A surge in demand for the Australian Dollar (AUD) towards the end of last week has left the Euro to Australian Dollar (EUR/AUD) exchange rate lower since markets opened this week. However, the Euro (EUR) is climbing amid some solid Eurozone data.
After tumbling from the level of 1.6247 to 1.6008 last week, EUR/AUD has seen modest gains this week so far.
At the time of writing on Tuesday morning, EUR/AUD trended near the level of 1.6060 and was still well below last week’s opening levels, despite a slightly stronger Euro.
Demand for the Euro has been a little stronger since yesterday’s Eurozone retail sales results came in well above forecasts, but the shared currency has failed to sustain a stronger recovery versus the resurgent ‘Aussie’.
The Australian Dollar saw a surge in demand last week on the back of stronger Chinese data and hopes for US-China trade negotiations, which continue this week.
Weakness in the US Dollar (USD) has bolstered demand in both the Euro and the Australian Dollar. The US Dollar is the Euro’s biggest rival and the risky ‘Aussie’ also benefits from weakness in the safe haven US Dollar.
Euro (EUR) Exchange Rates Solid as Eurozone Retail Sales Surge
The Euro was able to avoid further losses against a stronger Australian Dollar this week so far, thanks to some surprisingly strong Eurozone data published on Monday.
Monday saw the publication of November’s German and Eurozone retail sales results, which printed well above expectations in most major prints.
German retail sales were forecast to rise to 0.3% month-on-month but jumped to 1.4%. The yearly figure beat -0.7% expectations and only slipped to 1.1%.
Overall Eurozone stats were stronger than expected too, remaining at 0.6% month-on-month rather than falling to the forecast 0.1%. The yearly figure slipped from 2.3% to 1.1%.
Investors were pleased with the data, despite other Eurozone data showing slightly more concerning results. German factory orders printed worse than expected in November and Sentix’s Eurozone investor confidence index fell for the fifth consecutive month.
According to Sentix, ‘Neither politicians nor central banks seem to have really grasped the extent of this loss of momentum.’
Despite this warning though, investors were happy focusing on the more impressive retail sales data instead.
Australian Dollar (AUD) Exchange Rates Hold Gains after Last Week’s Risk Rally
The Euro struggled to regain much ground from the Australian Dollar this week so far, following last week’s surge in demand for the risky trade-correlated currency.
A trio of headlines made investors much hungrier to buy riskier currencies like the Australian Dollar last week, including hopes for US-China trade developments soon and some strong Chinese data.
Notably, the People’s Bank of China (PBoC) eased monetary policy last week in order to prop up China’s economy. Meanwhile, indications that the Federal Reserve may be more patient and flexible on US interest rate hikes also supported risk-sentiment.
These factors led to a surge in Australian Dollar demand, but a lack of strong domestic news in Australia means that many downside factors persist.
This has limited the Australian Dollar’s potential for further gains this week and made it easier for the Euro to Australian Dollar (EUR/AUD) exchange rate to rise, despite US Dollar (USD) weakness also supporting the ‘Aussie’.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Investors Anticipate Further Confidence Stats
While Sentix’s Eurozone confidence report was relatively low influence, more influential Eurozone confidence stats due in the coming days could still cause movement in the Euro to Australian Dollar (EUR/AUD) exchange rate.
Euro investors will react to any surprising Eurozone consumer confidence stats from December later in today’s session, and French consumer confidence figures from December will be published tomorrow.
Other noteworthy stats due on Wednesday include Australia’s November building permits and Germany’s November trade balance results, as well as the Eurozone’s November unemployment rate report.
Australia’s anticipated December business confidence report from NAB will be published on Thursday, followed by Australia’s November retail sales figures on Friday.
Of course, with the Australian Dollar having been strongly influenced by US-China economic and geopolitical news, any developments here will continue to drive movement in the Euro to Australian Dollar (EUR/AUD) exchange rate too.
