Australian Dollar to Euro (AUD/EUR) Exchange Rate Forecast to Dive as Chinese Trade Surplus Narrows Significantly

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One Hundred United States Dollars (USD)

The Australian Dollar to Euro (AUD/EUR) exchange rate softened by around -1.34% during Monday’s European session.

After China’s trade data declined beyond expectations, the Australian Dollar slumped versus the majority of its most traded currency competitors. Positive domestic data wasn’t enough to curtail the ‘Aussie’ (AUD) slide amid expectations of cooling trade between the South Pacific nation and the world’s second-largest economy.

The Euro, meanwhile, softened versus many of its most traded currency rivals as geopolitics continues to hinder single currency investment. With the relationship between Greece and Eurozone officials stretched to breaking point, many feel that a forced Greek exit from the Eurozone is an increasing likelihood.

The Australian Dollar to Euro (AUD/EUR) exchange rate is currently trending in the region of 0.7158.

Australian Dollar (AUD) Exchange Rate Dives on Chinese Imports

With a close trading relationship between Australia and China, the ‘Aussie’ softened considerably after China’s trade surplus narrowed well beyond expectations. Additionally, the disappointing data out of China had an effect on trader risk-appetite, which saw decreasing demand for the Australian Dollar’s high-yielding potential.

Chinas Trade Balance was forecast to drop from $60.62 billion to $40.20 billion, but the actual result plummeted to $3.08 billion in March. The steep decline was as a result of March’s Exports which declined by -15% on the year. March’s Imports also failed to impress having cooled by -12.7% on the year.

‘We can understand the imports fell because of falling imports of commodities, but exports fell so much, it was very much unexpected,’ said Shanghai-based analyst Nie Wen from Hwabao Trust.

Positive Australian Credit Card Balance data wasn’t enough to micrify the declination initiated by the weak trade data out of China.

The Australian Dollar to Euro (AUD/EUR) exchange rate has fallen to a low of 0.7150 today.

Euro (EUR) Exchange Rate Softens on Geopolitics

The continued issues between Greece and Eurozone officials are still weighing heavily on investor confidence, showing increasing reluctance to invest in the shared currency. Many fear that the options for Greece are running out as they continue to test the patience of creditors by failing to give enough detail in reform proposals.

Had the new Greek government secured funding earlier they could have paid off the International Monetary Fund (IMF) in full and recall European Central Bank (ECB) bonds. This would have alleviated much of the pressure they are currently facing as well as save them a considerable sum of money. Time seems to have run out for this option, however, with Athens no nearer to securing the funds it so desperately needs.

‘This step would save Greece’s budget billions of Euros, while reforming the Troika arrangement, eliminating the IMF’s and the ECB’s financial exposure to Greece,’ said Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics.

Australian Dollar to Euro (AUD/EUR) Exchange Rate Forecast to Hold Losses

Given the complete absence of domestic data to provoke changes, and with a lack of demand for risk-correlated assets, the Australian Dollar to Euro (AUD/EUR) exchange rate is likely to hold losses for the remainder of the European session.

The forthcoming Australasian session should see heightened AUD/EUR volatility with NAB Business Confidence data due for publication.

The Australian Dollar to Euro (AUD/EUR) exchange rate climbed to a high of 0.7228 today.

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