UPDATE
The Euro to Australian Dollar (EUR/AUD) exchange rate dived by around -0.6% on Tuesday morning.
After having rallied on Monday in response to easing concerns regarding Greece, the single currency declined on Tuesday morning. The depreciation can be linked to concern that Monday’s surge was unjustified given that talks between Greece and its creditors still have a long way to go.
The Australian Dollar, meanwhile, advanced versus its major peers despite dampened market sentiment amid a slowdown in China’s stock market. The ‘Aussie’ (AUD) appreciation can be linked to improving consumer confidence and rising iron ore prices.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5145.
Yesterday…
Euro (EUR) Exchange Rate Forecast to Advance against the ‘Aussie’ (AUD) amid Greek Bailout Optimism
The Euro to Australian Dollar (EUR/AUD) exchange rate rallied by around 1.2% on Monday afternoon..
In anticipation of a positive outcome from the ‘troika’ meeting today, the shared currency strengthened across the board. The ‘troika’ of creditors (comprising the European Central Bank (ECB), the International Monetary Fund (IMF) and the European Commission) meet today in order to discuss Greece’s third bailout package. There is general optimism that creditors will provide financial aid to Athens ahead of the August 20th deadline for which a payment to the ECB is due.
In addition to Greek bailout optimism, the common currency strengthened in response to data out of the currency bloc’s most influential nation. July’s German IFO Business Climate was forecast to drop from 107.4 to 107.2, but the actual result was an advance to 108. July’s IFO Current Assessment also bettered the median market forecast drop from 113.1 to 112.9, with the actual result climbing to 113.9. Additionally, German IFO Expectations eclipsed the market consensus of a fall from 102 to 101.8, with July’s actual result reaching 102.4.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5216.
Australian Dollar (AUD) Exchange Rate Forecast to Decline against the Common Currency (EUR) on Commodity Prices
Although market sentiment improved amid expectations of a positive outcome for Greece following today’s creditor meeting, the ‘Aussie’ declined versus many of its closest currency competitors. The depreciation can be attributed to bearish commodity prices with a particular reference to iron ore. Last week saw a significant drop in copper, gold and platinum prices which had a significant impact on the Oceanic currency. In addition, speculation regarding a September Federal Reserve official cash rate increase is also weighing on demand for the South Pacific asset.
With an absence of significant domestic data over the coming days, the ‘Aussie’ is likely to see fluctuations as a result of market sentiment and commodity prices. There is a chance that the Oceanic currency will strengthen if Greece is offered bailout funds and the US Dollar remains subdued.
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.5065 during Monday’s European session.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Gains ahead of Troika Outcome
With optimism regarding Greece’s third bailout program the main driver of common currency gains, any delay or dovish sentiment from creditors is likely to reignite pessimism regarding Greece’s future as a member of the Eurozone. Therefore, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold gains ahead of the meeting’s outcome. Any sign that they will accept the terms of the proposal and give Athens financial aid in a timely manner could see the single currency rally further.
In terms of domestic data on Tuesday, the EUR/AUD exchange rate could be comparatively subdued given the complete absence of European data and only one non-influential Australian publication. Market sentiment and commodity prices will drive the EUR/AUD exchange rate in the absence of significant domestic data.
The Euro to Australian Dollar (EUR/AUD) exchange rate climbed to a high of 1.5249 during Monday’s European session.