The Euro to Australian Dollar (EUR/AUD) exchange rate plummeted by around -0.82% on Tuesday morning.
Despite the fact that German Retail Sales printed positively on Tuesday morning, the shared currency is generally softer versus most of its major peers. This can be attributed to ongoing speculation that Greece will require an additional bailout program when the current one ends.
The Australian Dollar, conversely, strengthened across the board after the Reserve Bank of Australia (RBA) avoided cutting the benchmark interest rate despite predictions of a 25 basis point cut. In addition, positive domestic data and rising oil prices aided the ‘Aussie’ (AUD) advance.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4288.
Yesterday…
The Euro to Australian Dollar (EUR/AUD) exchange rate rallied by around 0.66% on Monday morning.
European data printed positively on Monday morning, which caused the shared currency to strengthen versus many of its major peers. Further appreciation can be attributed to improving sentiment towards the European Central Bank (ECB) as it readies quantitative easing despite fears that it can’t source the necessary bonds.
The Australian Dollar, meanwhile, dived versus most of its major rivals despite improved manufacturing out of China. The ‘Aussie’ (AUD) declination is as a result of Speculation that the Reserve bank of Australia (RBA) will cut rates after Tuesday’s policy meeting. Additional losses can be attributed to damp market sentiment and low oil prices.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.4422.
Euro (EUR) Exchange Rate Strengthens on Positive Data
Having avoided Greek dissent, and with the ceasefire in Ukraine seeming to hold, the shared currency recovered some of the losses accrued over the past few months. Additional appreciation is thanks to positive results from domestic data.
With European data erring towards the positive, the shared currency strengthened versus most of its major competitors. Of particular significance was the Eurozone Core Consumer Price Index, which met with the market consensus of 0.6%. Additionally, February’s Eurozone CPI came in at -0.3% which eclipsed the median market forecast of -0.5%, and the previous figure of -0.6%.
Ben Brettell, senior economist at Hargreaves Lansdown, said; ‘Falling energy costs should be of little concern to the ECB – they are essentially beyond its control, and in any case should prove positive for the Eurozone economy as disposable incomes rise. Core CPI inflation, which excludes volatile items such as food and energy, remained steady at 0.6%. This is still a worryingly low level, but the fact it didn’t fall further is mildly encouraging.’
The Euro to Australian Dollar (EUR/AUD) exchange rate has fallen to a low of 1.4313 today.
Australian Dollar (AUD) Exchange Rate Dives despite Improved Chinese Manufacturing
The HSBC China Manufacturing PMI saw February’s finalised figure at 50.7 which bettered the market consensus of 50.1. However, this didn’t aid an ‘Aussie’ uptrend and nor did the PBOC cash rate cut. Most expect further cuts to come with the money market still painting a tough picture.
‘More easing, beyond the latest lending rate cut, has to be carried out to bring about a material fall in cost of financing within the system,’ said André de Silva, Head of Asia-Pacific Rates Research at HSBC.
Ongoing geopolitical tensions in Libya have caused oil prices to drop and market sentiment to dampen. This has also put downward pressure on the risk-correlated Australian Dollar.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Gains
Given the variety of factors that are putting downward pressure on the ‘Aussie’, along with improved sentiment towards the single currency after pressure from the Greece situation eased, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold gains for the remainder of Monday’s trade.
Tuesday will be significant for those invested in the Australian Dollar with the Reserve Bank of Australia (RBA) rate decision due for publication. This will be particularly significant as opinion is divided as to whether they will cut their cash rate further. For those trading with the single currency, Tuesday’s German Retail Sales data will be of interest.
The Euro to Australian Dollar (EUR/AUD) exchange rate reached a high today of 1.4427.