During Tuesday’s European session, the Australian Dollar to Euro (AUD/EUR) exchange rate strengthened by around 0.36%.
Although the US Dollar is holding a position of strength ahead of key domestic data publications, and both gold and crude prices are trending lower, the Australian Dollar advanced versus many of its major peers. The ‘Aussie’ (AUD) appreciation can be linked to iron ore prices which soared after Chinese stocks slipped.
The Euro, meanwhile, softened versus most of its currency competitors in response to ongoing geopolitical tensions in Greece. With time running out before the Hellenic nation is required to repay a large instalment to the International Monetary Fund (IMF), the high possibility that they will default has seen dampened demand for the common currency.
The Australian Dollar to Euro (AUD/EUR) exchange rate is currently trending in the region of 0.7155.
Despite the fact that US Dollar strength would ordinarily see cool demand for the Australian asset, the ‘Aussie’ gained versus its major rivals during Tuesday’s European session. The appreciation has been sluggish, however, with dampened market sentiment and slightly disappointing domestic data weighing on demand.
The South Pacific asset climbed in response to surging iron ore prices as stocks in China cooled. ‘There’s a shortage of cargo at Chinese ports now. It seems foreign miners have slowed down their production and exports as well,’ said an iron ore trader in Singapore. ‘Certain grades are now reported to be in short supply,’ The Steel Index (TSI) said, referring to stocks of imported iron ore at Chinese ports.
The Australian Dollar to Euro (AUD/EUR) exchange rate has fallen to a low of 0.7128 today.
Given the complete absence of influential domestic data to drive changes, the single currency is likely to continue trending lower over the remainder of Tuesday’s European session. The depreciation was triggered by Greek officials stating that they will not back down in their fight against austerity measures.
With an IMF payment due in early June, the likelihood that Greece will default on the loan payment is incredibly high. Should they default, there is an increased chance that their lack of movement on proposed austerity measures will cause the Eurogroup to withdraw from awarding the cash-strapped nation vital bailout funds. Should this be the case, Greece will almost certainly be forced to leave the Eurozone as they seek financial aid elsewhere.
Given the absence of domestic data to drive changes for either currency, the Australian Dollar to Euro (AUD/EUR) exchange rate is likely to continue trending higher over the remainder of Tuesday’s European session. With that being said, however, there is a high possibility that the AUD/EUR pairing will see volatility in connection with US data publications. Should he US data print positively, the ‘Aussie’ is likely to slump versus its major peers. Conversely, should the US data produce poor results the Oceanic currency will appreciate significantly.
The Australian Dollar to Euro (AUD/EUR) exchange rate climbed to a high of 0.7166 today.
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