The Australian Dollar to Euro (AUD EUR) exchange rate rallied late on Monday as the Eurozone debt crisis began to simmer once again.
Greek Debt Weighs on Euro (EUR)
The Euro tumbled this morning over investor fears that Greece’s debt crisis could spiral out of control.
Prime Minister Alexis Tsipras is still yet to reach an agreement with the European Stability Mechanism (ESM) over the release of further funds as he resists implementing additional austerity measures, despite warnings that Greece’s debt could ‘explode’ in coming years.
In a leaked report last week the International Monetary Fund (IMF) warned that Greek debt is likely to rise to many times its GDP by 2030, adding;
‘Greece requires substantial debt relief from its European partners to restore debt sustainability.’
This has led to fresh concerns that Greece could crash out of the EU in a so called ‘Grexit’ if an agreement is not made by the next meeting of Eurozone finance ministers.
Resilient Iron Ore Prices Strengthen Australian Dollar (AUD)
The Australian Dollar was also strengthened by buoyant commodity prices on Monday as iron ore held steady at $83.34 a tonne.
This is just shy of the multi-year high of $83.65 it hit earlier in the month and comes despite the closing of the Chinese futures market for the Lunar New Year, which drove much of the movement in iron ore towards the end of last year.
AUD EUR Forecast: Australian Business Confidence Ahead
The AUD EUR exchange rate may slide later this morning following the release of NAB’s Business Confidence survey, which is expected to show a slight drop in sentiment in December due to concerns over the impact of the Trump administration on the Australian Economy.
Meanwhile the Euro may recover if France’s latest GDP figures impress investors, who expect the economy to have grown from 1% in the last quarter of 2016.
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