Australian Dollar to Euro Exchange Rate Falls Ahead of Australian Job Stats
Despite market anticipation for some key Australian data, the Australian Dollar to Euro (AUD/EUR) exchange rate hit new weekly lows during Wednesday trade.
Market anticipation for the latest US data, as well as Thursday’s anticipated Australian job market data, helped the Australian Dollar (AUD) to briefly hold its ground against the Euro (EUR) during Wednesday’s Asian session.
However, the pair tumbled overnight in reaction to the latest strong US inflation results, which dampened market appetite for risky currencies like the Australian Dollar.
After opening this week at the level of 0.6380, AUD/EUR has briefly touched on a high of 0.6404. While the pair briefly recovered from its low on Wednesday morning, it touched a new weekly low of 0.6327 during the American session.
Investors are hesitant to buy the Australian Dollar too much ahead of Thursday’s job results. Australia’s job market has been a regular source of optimism for ‘Aussie’ traders over the last year.
Euro (EUR) Holds Ground as Eurozone Prints Strong 2017 Growth
Even though Federal Reserve interest rate hike bets rose on Wednesday, the Euro remained strong throughout the day thanks to some solid data indicating that Eurozone growth was fairly impressive throughout 2017 overall.
Wednesday’s European session saw the publication of Q4 2017 Gross Domestic Product (GDP) projections from Germany, Italy and the Eurozone overall.
While Germany’s yearly growth rate came in slightly short of 3.0% expectations, it still printed at 2.9% – meaning Germany had the best growth rate of any G7 nation in 2017.
Italy’s growth rate came in at 1.6% as expected, while the Eurozone’s printed at the predicted 2.7% year-on-year figure.
The day’s other Eurozone data was decent too and helped the Euro to advance against the ‘Aussie’.
Germany’s final January inflation figure came in at 1.6% year-on-year as projected, and the Eurozone’s December industrial production report beat expectations in both prints.
Australian Dollar (AUD) Weakened by Fed Rate Hike Bets
On Wednesday, January’s US Consumer Price Index (CPI) report was published and beat expectations in all major prints.
With US inflation beating expectations, speculation that the Federal Reserve could tighten US monetary policy at a faster pace in 2018 gained traction.
As Federal Reserve interest rate hike bets rose, investors avoided buying risky currencies like the Australian Dollar – especially as markets currently expect that Australian interest rates will remain untouched throughout 2018.
Australian Dollar to Euro (AUD/EUR) Forecast: ‘Aussie’ Could Recover on Australian Job Data
Thursday’s Asian session will see the publication of Australia’s anticipated January job market report. As Australian job stats are typically influential, it could help the Australian Dollar to Euro (AUD/EUR) exchange rate recover towards the end of the week if it impresses.
Australia’s unemployment rate is forecast to have remained at 5.5%, with the employment change figure forecast to slow from 34.7k to 15k.
As Australia’s job market saw strong performance in 2017, signs of further strength in job data could boost the Australian Dollar and make analysts more confident that Australian wages could see more price pressures in 2018.
Wednesday’s US data caused fluctuations in AUD/EUR, but ultimately had little impact on the pair’s outlook for the week.
Thursday will also see the publication of some notable Eurozone ecostats, including unemployment data from The Netherlands and France, as well as Spanish and Irish inflation stats.
If these datasets impress too, a strong Euro may keep pressure on AUD/EUR and the pair could end the week lower.