In the aftermath of the decision by the People’s Bank of China to loosen monetary policy further, the Euro to Australian Dollar (EUR/AUD) exchange rate plummeted by around -0.83%. The single currency, meanwhile, has softened against the majority of its most traded currency rivals despite reasonably positive German data.
The Euro to Australian Dollar exchange rate is currently trending in the region of 1.4531.
The People’s Bank of China has refrained from selling repurchase agreements for the first time since July. This has compounded fears that China is headed for their slowest economic growth in a year since 1990. This has been beneficial to the Australian Dollar, however, as the prospect of cheaper trade bolsters demand.
The single currency has softened against most of its major peers despite positive German labour data. German Unemployment Change saw 14,000 fewer unemployed in November, slightly less than the previous figure but eclipsing forecasts of -1,000. Seasonally adjusted Unemployment Rate was unchanged at 6.6%.
Yesterday…
Despite the Euro falling against the majority of its most traded rivals after a European Central Bank official predicted quantitative easing in the next quarter, the Euro to Australian Dollar (EUR/AUD) exchange rate strengthened by around 0.60%. This can be attributed to a lack of risk sentiment amid declination in the commodities market. Of particular detriment to the ‘Aussie’ (AUD) has been falling iron ore prices.
The Euro to Australian Dollar exchange rate is currently trending in the region of 1.4676.
Euro (EUR) Trending Lower on Constancio Speech
European Central Bank Vice President Vitor Constancio stated on Wednesday that there is a very high likelihood that the ECB will employ quantitative easing in the next quarter. ‘We will have to consider buying other assets, including sovereign bonds in the secondary market, the bulkier and more liquid market of securities available,’ he stated.
‘The ECB is very well down the road preparing arguments for sovereign [quantitative easing],’ said Ken Wattret, economist at BNP Paribas. ‘It is now more a matter of when rather than if’ the ECB buys government bonds, said Nick Matthews, economist at Nomura.
The Euro to Australian Dollar exchange rate hit a low today of 1.4547.
Australian Dollar (AUD) Dives on Iron Ore Prices
Iron ore prices hit a five-year low on Wednesday and look to be continuing to fall. Given that Australia is the world’s largest producer and exporter of iron ore, the fall in prices has had a detrimental effect on the ‘Aussie’ (AUD). IG market strategist Evan Lucas said; ‘I’m expecting it to continue to fall because we continue to see mass overproduction.’
‘Demand doesn’t seem to be there at the minute; there seems to be more and more negative signs coming out from the property market and supply growth is still arriving from the majors,’ said Gavin Montgomery, a steel and iron ore analyst at Wood Mackenzie.
Euro to Australian Dollar (EUR/AUD) Forecast to Soften
Although iron ore prices aren’t looking any closer to rebounding, negative sentiment towards the ECB is mounting considerably. With the threat of QE now given a timeline, the EUR/AUD exchange rate is likely to soften.
The Euro to Australian Dollar exchange rate has reached a high today of 1.4702.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.8533,
Australian Dollar,,Euro,0.6823,
Australian Dollar,,Pound,0.5403,
Australian Dollar,,New Zealand Dollar,1.0829,
US Dollar,,Australian Dollar,1.1714,
Euro,,Australian Dollar,1.4650,
Pound Sterling,,Australian Dollar,1.8492,
New Zealand Dollar,,Australian Dollar,0.9229,
[/table]
