Greek Bailout Worries Boosted Australian Dollar Euro Exchange Rate
While January’s Australian foreign reserves were found to have narrowed sharply, falling from 76.1 billion to 68.6 billion, this was not enough to dent the Australian Dollar Euro (AUD EUR) exchange rate on Tuesday.
Investors were instead pleasantly surprised by the tone of the Reserve Bank of Australia’s (RBA) February policy meeting, which proved to be less dovish than some had feared. The resilience of recent domestic trade and growth data has been seen to improve the outlook of the domestic economy, encouraging policymakers to maintain a neutral view on monetary policy. Naturally this boosted demand for the ‘Aussie’ (AUD), in spite of the disappointing foreign reserve data.
Confidence in the Euro (EUR), meanwhile, was weakened by the rising tension surrounding the deadlock between Greece and its creditors. The International Monetary Fund’s (IMF) annual review of the Greek economy lead to fresh concerns that the Hellenic nation will be expected to adopt further austerity measures in exchange for continued support. While the IMF did make a renewed call for debt relief the signs of an increasing split of opinion on the Executive Board weighed heavily on the appeal of the single currency.
AUD EUR Exchange Rate Forecast: RBA Monetary Policy Statement in Focus
A lack of fresh Eurozone data is likely to support the AUD EUR exchange rate in the near term, with investors still discouraged by the dovish comments of European Central Bank (ECB) President Mario Draghi. Hopes are not high for Thursday’s raft of German trade data, which could extend the Euro’s slump if the trade surplus is found to have narrowed markedly at the end of 2016. Fresh signs of weakness within the Eurozone’s powerhouse economy could severely limit demand for the single currency, particularly if local political worries continue to mount.
The RBA monetary policy statement could offer a fresh boost to the antipodean currency on Friday, particularly if the latest growth and inflation forecasts prove positive. However, if the outlook of policymakers proves to be a little more muted then the AUD EUR exchange rate may struggle to maintain its recent uptrend.
Should signs continue to point towards the Federal Reserve raising interest rates sooner rather than later then the Australian Dollar could face greater softness, with tighter US monetary policy unlikely to benefit the antipodean currency.
Current Interbank AUD EUR Exchange Rates
At the time of writing, the Australian Dollar Euro (AUD EUR) exchange rate was making strong gains around 0.71, while the Euro Australian Dollar (EUR AUD) exchange rate was slumped in the region of 1.39.