The Euro to Australian Dollar (EUR/AUD) exchange rate advanced by around 0.20% on Friday morning.
After the Greek Prime Minister, Alexis Tsipras, reassured Eurozogroup officials that Athens would continue with the bailout program despite the ongoing tensions with Germany, the shared currency strengthened versus the majority of its most traded currency competitors.
The Australian Dollar, meanwhile, held gains after Thursday’s better-than-expected labour market data. This can be attributed to improved trader risk-appetite as the potential for a Grexit eases. The gains have been a little laboured, however, as a stronger Euro is less advantageous for Australia.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.3809.
Yesterday…
The Euro to Australian Dollar (EUR/AUD) exchange rate dived by around -0.74% on Thursday afternoon.
Although both quantitative easing and tensions between Greece and Germany caused significant single currency depreciation, Thursday has seen a slight Euro recovery as traders speculate that the depreciation was overdone. However, continued downwards pressure as a result of the aforementioned reasons is likely to see the common currency resume its decline.
The ‘Aussie’ (AUD) advanced versus nearly all of its major peers as a result of positive labour market data. A softer US Dollar and rising gold prices also fuelled the ‘Aussie’ uptrend.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.3766.
Euro (EUR) Exchange Rate Strengthens on Overselling
Given that quantitative easing in the Eurozone coincided with renewed fears regarding a Grexit, it is perhaps unsurprising that traders were flocking to sell the shared currency. As a result, however, the depreciation has been considered overdone.
With tensions between Greece and Germany still on a knife-edge, however, the Euro’s slight appreciation is likely to be short-lived. In addition to the pressure on Greece from the most powerful economy in the Eurozone, the European Central Bank (ECB) is pursuing a restrictive policy on Greece to pressure the government into subservience.
‘The ECB in my opinion is pursuing a policy that can be considered asphyxiating toward our government,’ Greek Finance Minister Yanis Varoufakis told Greece’s Mega TV in an interview.
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.3743.
Australian Dollar (AUD) Exchange Rate Advances on Soft US Dollar
After the US Dollar softened amid concerning results from the Federal Reserve stress tests on Wall Street banks, gold prices gained. The ‘Aussie’ is sensitive to movement in bullion and so appreciated as a result.
‘It has been a one-way road for both the Dollar and gold, and we are probably due for a larger correction than we have had so far today,’ Frederic Panizzutti, Dubai-based commodities expert.
Aiding the ‘Aussie’ uptrend was better-than-expected labour market data. In February, a greater number of jobs were created than anticipated, resulting in Employment Change of 15,600. In addition, joblessness dropped more than expected which resulted in an Unemployment Rate of 6.3%. However, most experts speculate that this is a blip in an otherwise difficult labour market situation.
‘The bigger picture is still that Australia’s economy is struggling to create jobs, and we still expect the unemployment rate to rise to 7 per cent by the end of the year,’ stated Capital Economics’ senior Asia economist Daniel Martin.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Losses
With traders speculating that the Euro will resume declination with so many downward pressures, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold losses for the remainder of Thursday’s trade.
A complete absence of Australian data may see a drop in volatility for the South Pacific asset.
The Euro to Australian Dollar (EUR/AUD) exchange rate climbed to a high of 1.3891.