The Euro to Australian Dollar (EUR/AUD) exchange rate ticked lower by around -0.25% on Thursday morning.
The forthcoming European Central Bank (ECB) rate decision is not considered of significance on Thursday given there is no possibility of a change to the cash rate. However, the accompanying press conference will be of interest because President Mario Draghi is expected to give an indication as to the timing of the launch of quantitative easing. The shared currency softened as some experts still fear that the ECB won’t be able to source the bonds to fund the operation.
The Australian Dollar, meanwhile, edged higher versus many of its major peers thanks to improved market sentiment amid higher crude prices. Australian data has been less impactful on the ‘Aussie’ (AUD) after producing mixed results. Retail Sales met with the median market forecast figure, but Trade Deficit widened.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4126.
Yesterday…
The Euro to Australian Dollar (EUR/AUD) exchange rate dived by around -0.77% on Wednesday afternoon.
As the European Central Bank (ECB) readies quantitative easing, the shared currency softened versus most of its major peers. This is as a result of concern that the institution will be unable to source the required bonds to finance the operation.
The Australian Dollar, meanwhile, strengthened versus most of its major rivals after data out of China printed impressively. Further gains can be attributed to Gross Domestic Product data showing improved growth and rising oil prices causing greater risk-appetite.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4202.
Euro (EUR) Exchange Rate Softens ahead of ECB QE
With the launch of an extensive program of quantitative easing around the corner, there is mounting speculation amongst experts that the ECB will be unable to finance the operation due to a lack of European government bonds. In particular, the lack of transparency from the European institution has seen investor confidence dwindle.
‘The exact proportion of ECB purchases of sovereign bonds has yet to be officially specified as the total will include the debt of agencies and European institutions, as well as asset-backed securities and covered bonds. It also hasn’t provided any detail of breakdown by maturity, or the means for determining which bonds will be bought when’ said Eshe Nelson, writing for Bloomberg.
The Euro to Australian Dollar (EUR/AUD) exchange rate has fallen to a low today of 1.4160.
Australian Dollar (AUD) Exchange Rate Rallies on Positive Growth
Although the quarterly Australian GDP failed to meet with forecast growth, GDP met with the median market forecast on the year which aided an ‘Aussie’ (AUD) uptrend. ‘The good news is we’ve now completed 23 years of continuous growth, the bad news is we’re still running below trend, which will keep upward pressure on the unemployment rate, and keeps the RBA on rate-cut watch,’ Commonwealth Bank chief economist Michael Blythe said immediately after the figures were released.
‘These figures are pretty much in line with what the Reserve Bank was expecting to see, so it doesn’t add to the case of a rate cut,’ he added.
China’s Composite and Services PMIs improved, which aided the ‘Aussie’ surge. Additionally, rising oil prices saw increased demand for higher yielding assets thanks to rising risk-appetite.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Gains
Given the lack of data to curb the trend, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold gains for the remainder of Wednesday. Thursday is likely to see greater EUR/AUD fluctuation with several influential data publications pertaining to both nations.
The Euro to Australian Dollar (EUR/AUD) exchange rate climbed to a high today of 1.4338.
