The Australian Dollar to Euro (AUD EUR) exchange rate reached an 18-month high overnight on Wednesday as the currency pairing fluctuated wildly.
Australian Dollar (AUD) Bolstered by Consumer Confidence
The Australian Dollar rallied to an 18-month high in the early hours of Thursday as Australian Consumer Confidence unexpectedly rose in January.
Westpac reported that confidence saw a slight rise from 97.3 to 97.4, beating expectations that it would slide and it showing its first improvement in three-months.
The slight increase and the recent uptick in commodity prices also decreases the likelihood that the Reserve Bank of Australia (RBA) will seek to cut interest rates further according to Elliot Clarke, senior economist at Westpac. He said;
‘A boost to the terms of trade from higher commodity prices… point to the Australian economy’s growth rate lifting from the current 1.8% to 3.0% in 2017, precluding any need for further rate cuts.’
Euro (EUR) Stumbles as Le Pen Fears Grow
The Euro continues to suffer from the growth of populism across the globe as recent polls show that National Front leader Marine Le Pen is expected to qualify for the second round in the French presidential elections.
Le Pen is seen as a major threat to the stability of the EU as she seeks to pull France, the second largest economy in the Eurozone out of the Union and reinstate the Franc in place of the Euro. To this end she recently outlined her plans for how she would leave the EU, which included collaborating with other participants of the single currency to form a new basket of currencies.
AUD EUR Forecast: Stabilisation Possible as Australian Unemployment Expected to Hold
The AUD EUR exchange rate may begin to stabilise on Thursday as Australia releases its latest employment data, with the unemployment rate expected to hold steady at 5.7% in December. While employment is set to continue growing although at a slower pace than in November.
Meanwhile the European Central Bank (ECB) will meet overnight on Thursday for its first policy meeting of 2017. The Euro is not expected to show much movement however as the ECB is almost guaranteed to keep interest rates at a record low of 0%.
Current Interbank Exchange Rates
At the time of writing the AUD EUR exchange rate was trending around 0.70 and the EUR AUD exchange rate was trending around 1.41