Australian Dollar to Euro Exchange Rate Emerges from Multi-Year-Lows on Eurozone Data
Despite a lack of strong Australian data and mixed demand for risk-correlated currencies, the Australian Dollar to Euro (AUD/EUR) exchange rate climbed on Tuesday as investors sold the Euro (EUR).
Due to market risk-aversion and concerns about the possibility of a US-sparked ‘trade war’, AUD/EUR plunged last week from 0.6380 to 0.6275.
On Tuesday AUD/EUR touched on its lowest level since September 2015 – 0.6236, but during the European session the pair recovered slightly due to some disappointing Eurozone confidence stats.
Tuesday’s European session saw the publication of ZEW’s March economic sentiment index survey results, which were highly disappointing.
Germany’s economic sentiment print slumped from 17.8 to just 5.1, despite being forecast to come in at 13.1. Overall Eurozone sentiment also fell far, from 29.3 to just 13.4 and well below the expected 28.1.
The concerning figures were largely due to market jitters about increased protectionist rhetoric in the US and the possibility of a trade war impacting Eurozone trade too.
Australian Dollar (AUD) Exchange Rate Strength Limited by Risk-Aversion
Persistent concerns about the stricter more protectionist tone the US Presidential administration has taken on global trade have continued to keep pressure on risky trade-correlated currencies like the Australian Dollar (AUD).
On top of trade war fears, US political uncertainties and expectations for higher interest rates in the US have left risky currencies even less appealing.
As a result, the mixed and relatively low-influence Australian ecostats published in recent sessions have not been enough to help the ‘Aussie’ mount a stronger recovery against the Euro.
Tuesday saw the publication of Australia’s Q4 2017 house price index results. Australian house prices unexpectedly rose from -0.2% to 1% quarter-on-quarter, beating the expected 0.1%.
The yearly figure slipped though, from 8.3% to 5.0%.
Euro (EUR) Exchange Rates Avoid Further Losses as ECB Speculation Flares Up
Could the European Central Bank (ECB) be debating the possibility of Eurozone interest rate hikes next year? That’s what sources close to the bank have claimed according to reports this week.
The bank’s officials are increasingly shifting debate away from bond-buying towards the path that Eurozone interest rate hikes should take, according to the report.
The news boosted bets that the ECB could be preparing to hike Eurozone interest rates some time in Q2 2019.
A separate report saw ECB board member Yves Mersch state that all the conditions were in place for Eurozone inflation to rise.
Overall, despite the dovishness of ECB members last week, this week’s ECB news has left the Euro slightly more appealing and has boosted the outlook for the shared currency.
Australian Dollar to Euro (AUD/EUR) Forecast: Australian Job Market Results in Focus
The Australian Dollar to Euro (AUD/EUR) exchange rate could extend its recovery towards the end of the week if upcoming Australian data impresses investors.
Thursday will see the publication of Australia’s February job market results.
The key unemployment rate is expected to remain at 5.5% with the participation rate forecast to stay at 65.6%, and a modest employment change figure of 20k predicted.
If Australia’s job markets results beat expectations it would boost Australian Dollar support and potentially help AUD/EUR to see a stronger recovery from its recent multi-year-lows.
However, the Australian Dollar could remain weak if market concerns about US trade protectionism worsen and markets become more risk-averse.
Euro trade, on the other hand, is likely to react to any fresh comments or signals from European Central Bank (ECB) officials.
Markit’s March PMI projections for the Eurozone, due for publication on Thursday, might also influence the Australian Dollar to Euro (AUD/EUR) exchange rate.