UPDATE
The Euro to Australian Dollar (EUR/AUD) exchange rate rallied by around 0.9% on Tuesday morning.
German Consumer Prices met with the median market forecast in September which caused the Euro to strengthen versus its major peers. Although German Inflation didn’t move away from the forecast 0.0%, the fact that it avoided dropping into negative territory has bolstered the views of those who think the period of low inflation is transitory.
The Australian Dollar, meanwhile, declined versus its major rivals despite a positive score from September’s NAB Business Confidence survey. The lack of demand can be attributed to data out of China which showed September’s Imports contracted by -20.4% on the year. Given that China imports a significant amount from Australia, China’s trade data highlights the extent of the South Pacific nation’s trade issues.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5602.
Yesterday…
EUR/AUD Exchange Rate Predicted to Tick Lower on Delayed Fed Bets
The Euro to Australian Dollar (EUR/AUD) exchange rate edged lower by around -0.3% on Monday afternoon.
Despite a number of disappointing ecostats, the single currency advanced versus many of its currency rivals last week. This was due, in the main, to negative correlation with the US Dollar. As more and more traders were forced to delay bets regarding the timing of a Federal Reserve benchmark rate hike, the US Dollar cooled significantly. Given that the EUR/USD pairing is the most traded in the world, US Dollar weakness led to single currency strength.
Although there is a complete absence of influential European economic data on Monday, the Euro is holding a comparatively strong position versus its peers. This is primarily the result of US Dollar weakness as traders continue to digest dovish minutes from the most recent policy decision. Published last Thursday, the minutes revealed that the Federal Open Market Committee (FOMC) is unlikely to consider raising the benchmark interest rate until there are signs that the global economy is improving not slowing.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5421.
AUD/EUR Conversion Rate Forecast to Edge Higher after Chinese Stocks Gain
Similarly to the Euro, the Australian Dollar advanced versus its major peers in response to the cooling US Dollar. The longer a delay to a Fed cash rate hike, the better for the Australian Dollar. With the Reserve Bank of Australia (RBA) showing no sign of plans to ease policy again before the turn of the year, policy stability has also supported demand for the South Pacific asset.
Australian Credit Card Purchases and Credit Card Balances printed broadly in line with previous figures in August. However, ‘Aussie’ (AUD) demand is mainly the result of stability in China after the Shanghai Composite Index ended the Asian session 3.3% higher. With commodity prices improving amid speculation of heightened demand from the world’s second-largest economy, risk sentiment improved, which is also supportive of the high-yielding Oceanic currency.
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.5402 during Monday’s European session.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Trend Narrowly ahead of Fed Speeches
Given the lack of further influential data pertaining to either Europe or Australia, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to continue trending within a limited range during Monday’s European session. With that being said, there is the possibility of volatility with several Fed officials due to speak about policy outlook later on Monday, especially given that the EUR/AUD pairing is trending in a tight range in response to US Dollar weakness.
Tuesday will be significant for the pairing with German inflation data due for publication. If German consumer prices drop into negative territory it will almost certainly mean that the European Central Bank (ECB) will be required to intervene. Australia’s Business Confidence data will also spark volatility for the EUR/AUD exchange rate on Tuesday.
The Euro to Australian Dollar (EUR/AUD) exchange rate climbed to a high of 1.5556 during Monday’s European session.