The Euro to Australian Dollar (EUR/AUD) exchange rate strengthened by around 0.94% on Thursday morning.
After the Federal Reserve hinted towards a rate hike in 2015, one of the only major central banks to do so, demand for the high-yielding ‘Aussie’ (AUD) dampened considerably. A stronger US Dollar also saw gold prices decline which aided the Australian Dollar downtrend.
The Euro, meanwhile, edged higher versus most of its major peers after German unemployment saw a positive declination. However, there is the possibility for the Euro to plunge if German inflation data, due for publication later on Thursday afternoon, prints poorly; a high likelihood considering that oil prices halved in the past few months.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4432.
Yesterday…
The Euro to Australian Dollar (EUR/AUD) exchange rate dived by around -0.50% on Wednesday morning.
After gaining significantly as tensions regarding a potential Grexit eased, the common currency softened on Wednesday. This can be attributed to traders fearing the currency’s recovery was unjustified, especially given the recent intervention from the European Central Bank (ECB). Mixed results from domestic data also weighed on the single currency.
The Australian Dollar, meanwhile, strengthened versus most of its major rivals after core inflation improved. The non-core consumer prices index softened, but this has been a standard occurrence for many major economies thanks to tumbling oil prices.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4273.
Euro (EUR) Exchange Rate Trending Lower on Pared Gains
Over the past few days the shared currency strengthened as a result of easing tension regarding the Greek elections. Wednesday has seen the Euro slump versus many of its major competitors after traders pared back the gains with renewed focus on the huge injection of liquidity into the Eurozone.
‘The quantitative easing programme is so substantial that it will certainly have an impact on the macro dynamics of the balance between demand and supply in primary as well as secondary markets,’ says expert Enrico Bruni. ‘In a micro sense, it will also most likely affect the way end-users consume liquidity both in government bonds and corporate credit,’ he adds.
Additionally, mixed European data has only aided the Euro downtrend. Whilst German Consumer Confidence improved from 9 to 9.3, the German Import Price Index declined on both a yearly and monthly basis in December.
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low today of 1.4160.
Australian Dollar (AUD) Exchange Rate Advances on CPI
Although the year-on-year Australian Consumer Prices Index softened beyond expectations in the fourth quarter, the Australian Dollar strengthened versus most of its major peers. This is due to that fact that inflation is dropping globally whilst the oil glut forces crude prices lower. The ‘Aussie’ advance is as a result of improvement in the core inflation data.
‘There was talk of a rate cut next week, so the solid CPI numbers have significantly reduced that possibility, supporting the Australian Dollar,’ said currency strategist Koji Fukaya. ‘But it is difficult to expect the ‘Aussie’ to keep supported especially against the US Dollar as the underlying strength of the US Dollar remains intact.’
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Losses
Given the lack of data to influence changes, and with dwindling optimism as to how affective quantitative easing will be in the Eurozone, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold losses for the remainder of Wednesday.
The Euro to Australian Dollar (EUR/AUD) exchange rate reached a high today of 1.4369.