The Australian Dollar to Euro (AUD/EUR) exchange rate fell during Wednesday’s European trading, despite ongoing uncertainty in negotiations between Greece and the troika.
The prospect of a Greek exit from the Eurozone has seen the Euro sink to seven-year lows against the British Pound (EUR/GBP) whilst also softening against a whole host of other major currencies.
Greek finance minister Yanis Varoufakis is attempting to negotiate a better austerity deal for his nation as it has been struggling rather significantly since the onset of the global financial crisis.
However, many economists fear the outcome of the debt negotiations may not be as favourable as some have forecast.
Market analyst Michael Hewson commented: ‘It is hard to be anything other than pessimistic about the outcome of what is unfolding in Europe, with respect to Greece and its negotiations with its creditors, as the negotiations continue to resemble a form of Mexican stand-off, or a game of Russian roulette.’
‘The hope is that we may get some form of deal by next week, and hopefully before the end of the month, but after the events of the last few days it is hard to see any hope of a lasting solution given all the threats and name calling, which suggests that any solution over the coming days could well be just a sticking plaster of a case of Grexit deferred, and then markets will have to go through the whole tedious process of name calling again.’
Meanwhile, the Australian Dollar depreciated as ANZ Bank downgraded its price forecasts for Australia’s largest commodity, iron ore. Furthermore, the banking giant predicts the global surplus of raw steel will increase twofold in the next year.
Commodity researcher Mark Pervan commented: ‘The market has been hit by the perfect storm of substantial, new iron supply entering the market in a weakened demand environment. Large, low-cost expansions are still coming, suggesting key industry players are prepared to accept a lower floor price.’
The Australian Dollar to Euro (AUD/EUR) exchange rate could fluctuate on any comments from the European Central Bank (ECB) in the near future, as well as any developments in Greek negotiations.
Thursday will also see the release of final German Consumer Price Index stats as well as Eurozone Industrial Production figures, which could have an effect on the Euro to Australian Dollar (EUR/AUD) exchange rate.
Reserve Bank of Australia (RBA) Governor Glenn Stevens is expected to speak on Friday and could impact AUD/EUR trading.
The Australian Dollar to Euro (AUD/EUR) exchange rate is presently reaching 0.6838. The Euro to Australian Dollar (EUR/AUD) exchange rate is trending in the region of 1.4628.
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