The Euro to Australian Dollar (EUR/AUD) exchange rate was trending within a tight range on Wednesday morning.
Although positive data out of China saw heightened demand for the high-yielding Australian Dollar, dampened market sentiment amid geopolitical tensions in Europe is still weighing on demand for the South Pacific asset.
The shared currency, meanwhile, is holding fairly steady after a significant declination on Tuesday. Positive domestic data has had little by way of impact with the weight of geopolitics driving investor focus.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4114.
Yesterday…
The Euro to Australian Dollar (EUR/AUD) exchange rate softened by around -0.21% on Tuesday morning.
The shared currency slumped versus the majority of its most traded currency rivals on Tuesday morning in spite of the fact that German economic data produced positive results. The declination is as a result of dwindling investor confidence after Greece’s latest program for reform was rejected by creditors.
The Australian Dollar, meanwhile, softened versus many of its major peers as a result of dampened market sentiment amid geopolitical tensions in Europe and low iron ore prices. Compounding the depreciation was domestic data which produced results which err towards negativity.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4114.
Euro (EUR) Exchange Rate Dives on Geopolitics
For the most part, European economic data printed positively on Tuesday. Of particular note was the German Unemployment Rate for March which saw a seasonally adjusted score of 6.4%, slightly down from expectations of 6.5% unemployment. Eurozone inflation data produced a positive result having risen slightly, although it is still in negative territory. The core measure eased however, which has been flagged as a concern by many economists.
‘The inflation rate is set to rise again over the course of the year, mainly because oil prices will start increasing at some point as well,’ said Marco Wagner, an economist at Commerzbank AG in Frankfurt. ‘The latest ECB measures might of course have an effect as well, but it’s probably minor.’
However, the positive data has had little by way of impact on Euro movement with the threat of a Greek exit from the Eurozone dominating investor focus. After Athens’ latest reform program was rejected by creditors, many speculate that Greece will be forced to ally with Russia.
‘This is an attempt to ratchet up the pressure on the rest of the Eurozone to make concessions to Greece,’ said Simon Tilford, the deputy director of the Centre for European Reform in London. ‘Moscow could provide a little bit of funding to tide over the Greeks,’ Mr. Tilford added. ‘But it is not in a position to provide the kind of money that Greece would need to stay in the Eurozone.’
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low today of 1.4096.
Australian Dollar (AUD) Exchange Rate Softens on Domestic Data
All of the unknown’s surrounding Greece’s future as a member of the Eurozone has caused significantly dampened trader risk-appetite, which has seen the risk-correlated ‘Aussie’ (AUD) soften versus many of its major peers.
Additional ‘Aussie’ losses can be attributed to less-than-ideal domestic data results. February’s New Home Sales came in at 1.1% on the month, down from the previous figure of 1.8%. In addition, Private Sector Credit failed to meet with expectations on the year in February, with the monthly score declining from the previous figure.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Losses
Given the lack of domestic data to curb the trend, and with the situation in Greece dominating trade, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold losses for the remainder of the European session.
Wednesday may see EUR/AUD volatility with data from Europe, Australia and China having the potential to provoke changes.
The Euro to Australian Dollar (EUR/AUD) exchange rate climbed to a high of 1.4181 today.