The Australian Dollar to Euro (AUD/EUR) exchange rate remained in a tight range in Tuesday’s European session after the Reserve Bank of Australia (RBA) meeting minutes caused fluctuations in the ‘Aussie’ overnight.
The RBA reiterated its desire for a weaker Australian Dollar as economic growth is still lagging and is expected to remain weak into most of 2016.
The minutes read: ‘A lower exchange rate would have an immediate beneficial effect on some sectors such as tourism. It would need to be lower for a sustained period to have a significant effect on large investment decisions in other trade-exposed sectors.’
The Reserve Bank of Australia has cut interest rates twice this year and has stated it is open to more downward adjustments if necessary.
Labour market data has improved recently, but the Australian Dollar refuses to budge despite a serious drop in commodity prices. Australia’s largest export, iron ore, has fallen by around 50% in the past twelve months.
The RBA stated: ‘The board’s assessment was that the stance of monetary policy should be accommodative. Output growth had continued at a below-trend pace over the past year and would remain a little below trend in the period ahead before picking up to around trend in the latter part of 2016.’
Meanwhile over in the Eurozone, negotiations between Greece and its creditors continue but to little avail. The nation is forecast to run out of money by the end of June and investors are heavily eyeing the June 18th Eurogroup meeting for guidance.
Greek politician Stavros Theodorakis commented: ‘I called on the prime minister to consider than the Greek economy is desperately close to its limits… Greek society is suffering from the constant postponement of a deal.’
The Australian Dollar to Euro (AUD/EUR) exchange rate could perhaps be in for a quiet end to the week with little Eurozone or Australian data of influence due to be released.
However, with such volatile Greek talks continuing, the AUD/EUR currency pair could experience some interesting movement, perhaps most notably on the day of the Eurogroup meeting on Thursday.
Additionally, any changes in commodity prices could impact the Australian Dollar exchange rate.
The Australian Dollar to Euro (AUD/EUR) exchange rate is trending in the region of 0.6876.
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