The Australian Dollar to Euro (AUD/EUR) exchange rate softened in Tuesday’s European session as German and Eurozone ZEW surveys printed favourably.
The ZEW German Economic Sentiment Survey climbed from 53.0 to 54.8 in March, a few shades below the 59.4 economists had expected, but still a 13-month high.
ZEW President Clemens Fuest commented: ‘Economic sentiment in Germany remains at a high level. In particular, the continuing positive development of the domestic economy confirms the expectations of experts. At the same time, limited progress is being made with regard to solving the Ukraine conflict and the sovereign debt crisis in Greece. This has a dampening effect on sentiment.’
The situation between Greece and its creditors appears to have come to a bit of a standstill with not much progress being made and tensions between Greece and Germany heightening.
Furthermore, as long-term decisions seem to fading into the background, Greece is running out of money and JP Morgan have now suggested there’s a 25% chance Greece could leave the currency bloc this year.
Fuest continued: ‘The situation is getting worse every day. It’s hard to see from the outside what the Greek government is intending to do. What’s worrying me is that there’s too much of a focus on an exit.’
Meanwhile, the Australian Dollar fluctuated in response to the Reserve Bank of Australia (RBA) meeting minutes which were published on Tuesday. The central bank suggested that there may be further adjustments to the official cash rate in the near future.
However, some economists have concerns over the housing market and a rate cut could drive those fears higher.
‘There is a sense that the very speedy rebound in the housing market indicators in Sydney[and to a lesser extent Melbourne] since the February rate cut, and a lack of any meaningful progress on a macro-prudential measures to contain it, mean the RBA is working without a net here.’
Meanwhile, the Australian Dollar could be in for movement on Wednesday with the release of Westpac’s Leading Index.
The rest of the week will be quiet for highly significant Australian domestic data lending a lot of the ‘Aussie’s’ movement to global developments.
The Euro to Australian Dollar (EUR/AUD) exchange rate is reaching 1.3889. The Australian Dollar to Euro (AUD/EUR) exchange rate is trading in the region of 0.7202.
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