With the Euro (EUR) on a bearish trend the AUD/EUR conversion rate has been making strong gains on the back of unexpectedly bullish Australian employment data.
It has not been an especially good week for the Eurozone or the single currency (EUR), with fresh turmoil in both Greece and Portugal. Greek Prime Minister Alexis Tsipras has struggled to reconcile with creditors over the value of houses covered by foreclosure laws, objecting to lowering the threshold in the view of protecting first-time buyers.
Having failed to secure the latest tranche of bailout funds at Tuesday’s meeting of Eurogroup finance ministers, Tsipras must reach an agreement within the week or risk the potential collapse of the Hellenic nation’s third bailout program. An anti-austerity general strike took place on Thursday, putting additional pressure on the government to make progress on reforms.
Also dragging down the Euro were words from European Central Bank (ECB) President Mario Draghi, who emphasised the downside risks to the single currency when addressing the European Parliament. As the policymaker also reiterated the central bank’s willingness to engage in further monetary loosening measures in the imminent future if required, the common currency slumped markedly across the board.
The Australian Dollar (AUD), meanwhile, has been on a particularly bullish run after an unexpectedly strong showing on the October Employment Change and Unemployment Rate figures. Smashing estimates, the number of employed in Australia rose by 58,600 rather than 15,000 as the level of unemployment dropped to 5.9%. This shored up confidence in the domestic job market while increasing bets that the Reserve Bank of Australia (RBA) will not move to lower interest rates in the near-future.
Although Chinese New Yuan Loans and Aggregate Financing figures retreated later in the day, this latest sign of slowness in the world’s second largest economy was not sufficiently dovish to weigh on the antipodean currency.
Friday’s third quarter German and Eurozone Gross Domestic Product reports are expected to provoke further volatility for the AUD/EUR exchange rate, as investors anticipate that economic growth within the currency union will show an uptick. Should these figures print positively the Euro is likely to rally, with fresh signs of health sure to outweigh recent concerns.
With no further domestic data due for release ahead of the weekend, the ‘Aussie’ could lose some momentum, particularly if the upcoming US Advance Retail Sales and University of Michigan Confidence Index lend additional support to the odds of the Fed hiking interest rates in December.
At time of writing, the Australian Dollar to Euro (AUD/EUR) exchange rate was extending gains in the region of 0.6603, while the Euro to Australian Dollar (EUR/AUD) pairing slumped in the range of 1.5138.
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