The Euro to Australian Dollar (EUR/AUD) exchange rate edged higher by around 0.17% on Friday morning.
As the Eurogroup meeting in Riga progresses, the single currency strengthened versus many of its most traded currency rivals. Although Greece will not be presenting reforms, heightened speculation that more of the contentious issues are close to resolution has eased fears of a Greek exit from the Eurozone.
The ‘Aussie’ meanwhile, ticked higher versus many of its most traded currency competitors. This can be attributed to improving iron ore and gold prices. A softer US Dollar and slightly better market sentiment is also beneficial for the South Pacific asset.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.3940.
Yesterday…
The Euro to Australian Dollar (EUR/AUD) exchange rate ticked higher by around 0.57% on Thursday afternoon.
Although most of Thursday’s European economic data publications printed below forecast figures, the single currency strengthened versus many of its major peers. The uptrend is as a result of German Consumer Confidence reaching the highest level since 2001. Additional single currency appreciation can be attributed to fears that Wednesday’s declination was overdone.
The Australian Dollar, meanwhile, edged lower versus many of its major peers in response to disappointing manufacturing data out of China. Rocky market sentiment amid geopolitical tensions in Europe aided the ‘Aussie’ (AUD) downtrend.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.3924.
Euro (EUR) Exchange Rate Trending Higher as Greece Bags Tax Dodger
With geopolitical tensions in Greece weighing on investor confidence, the Euro declined significantly on Wednesday. Some of its losses were recovered on Thursday, however, as traders felt that the Greek woes had already been priced-in to a large extent. Recent developments, which include seeing Greek authorities arrest a high-profile tax dodger, has eased trader concern that Athens was not taking reformation seriously.
In the main, European economic data printed poorly on Thursday. The German Services, Manufacturing and Composite PMIs all failed to meet with market consensus figures. In addition, Eurozone Services, Manufacturing and Composite PMIs failed to meet with expectations.
However, German Consumer Confidence rose from 10.0 to 10.1, which is the highest level since 2001. Consumer sentiment in April was mixed. ‘While the consumer climate improved once more, the increase was not quite so marked,’ market research company GfK said in a statement. ‘That is the highest level since October 2001. The consumer climate in Germany is continuing its uptrend, but at a more muted pace,’ the statement added.
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low today of 1.3788.
Australian Dollar (AUD) Exchange Rate Softens on China’s Manufacturing Contraction
After rallying considerably on Wednesday after inflation data met with median market forecast figures, the ‘Aussie’ tailed off on Thursday. Muted trader risk-appetite is one contributor to the South Pacific asset’s downtrend.
The HSBC China Manufacturing PMI declined from 49.6 to 49.2 in April; remaining below the 50 mark which separates growth from contraction. Annabel Fiddes, Economist at Markit said; ‘Operating conditions in China’s manufacturing sector deteriorated slightly for the second month running in April, with the flash reading of the PMI falling to a one year low. Production increased only marginally, while total new business declined for the second successive month. Relatively weak demand conditions were also highlighted by stronger deflationary pressures in the sector, with both input and output prices falling at faster rates. Meanwhile, job shedding across manufacturing firms was recorded for the eighteenth month in a row.’
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Gains
Although any developments in Greece are likely to see the shared currency fluctuate, any bad news will add downward pressure on the South Pacific currency amid dampened market sentiment. Therefore, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold gains for the remainder of Thursday’s European session.
Friday could see heightened EUR/AUD volatility with German economic data due for publication, and Euro-area finance ministers and central bankers meeting in Riga.
The Euro to Australian Dollar (EUR/AUD) exchange rate climbed to a high of 1.3885.