The Australian Dollar to Euro (AUD/EUR) exchange rate gained significantly in Friday’s European session after credit rating agency Standard & Poor’s suggested that Australia’s AAA rating was safe in the near-term and Greek negotiations continued.
The Euro has been extremely sensitive to any developments in talks between Greece and its creditors. As meetings between finance ministers continue, investors have been cautious of the Euro as some economists suggest Greece’s only option is to leave the Eurozone.
Currency strategist Adam Myers commented: ‘The reason that the Euro is now lower is that a lot of people still have this sanguine view that there will be an agreement because they have to reach one. At the moment the market reaction is too sanguine.’
The third Eurogroup meeting of this week is taking place at 14:00 GMT and could cause significant Euro to Australian Dollar (EUR/AUD) exchange rate movement dependent on the outcome.
Industry expert Keith Skeoch stated: ‘There is clearly a very significant concern re-emerging at the moment that we are seeing real issues surrounding the Eurozone. If they have to impose capital controls to keep Greece in, that is really about a two-tier Euro and is that then the beginning of the end?’
However, Greek citizens are pulling funds out of banks at an alarming rate.
Helena Smith reports: ‘In the corridors of power and on the street, there is a pressing issue that many now speak about only in hushed tones and confidential whispers: the solvency of Greek banks.’
Meanwhile, the Australian Dollar regained some strength after Standard & Poor’s clarified that Australia’s AAA credit rating wasn’t in jeopardy in the near-term.
The ‘Aussie’ softened rather dramatically when S&P’s suggested that Australia’s budget this year was in danger from economic shocks.
The Australian Dollar to Euro (AUD/EUR) exchange rate could fluctuate on Monday with the release of German IFO Business Climate, Current Assessment and Expectations figures.
Final German Gross Domestic Product (GDP) and Eurozone Consumer Price Index (CPI) stats are due for publication on Tuesday.
The Australian Dollar to Euro (AUD/EUR) exchange rate is trading at 0.6909. The Euro to Australian Dollar (EUR/AUD) exchange rate is trending in the region of 1.4477.
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