AUD/EUR Exchange Rate Rallies on Reduced Australian Trade Deficit
With market sentiment improved thanks to rising commodity prices, and with domestic data producing positive results, the Australian Dollar climbed versus most of its major peers during Thursday’s European session.
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Australian Dollar Forecast: RBA Minutes to Provoke Volatility
During Thursday’s European session, the Australian Dollar advanced versus the majority of its closest currency rivals. The appreciation was mostly the result of positive domestic trade data, although improved market sentiment amid rising commodities prices also aided ‘Aussie’ (AUD) gains.
Australia’s trade deficit was reduced from -3.04 billion to -2.16 billion in March. The improvement in trade can be attributed to a massive 4% increase in exports, whilst import growth only reached 1%. Experts have stated that the increase in demand for gold had the most positive impact on Australia’s trade. However, analysts at CBA predict a reduction in exports in April with iron ore prices expected to drift lower.
‘The price of both coal and iron ore marched higher in April which bodes well for the next monthly read on the trade balance,’ CBA economist Gareth Aird said. ‘However, we see downside risks to the current spot price of iron ore ($US60) and expect the price of iron ore to drift lower over 2016. As such, monthly trade deficits are expected to print around $3bn throughout most of 2016.’
Later during today’s session market focus will be dominated by the forthcoming publication of the Reserve Bank of Australia (RBA) statement on monetary policy. Given that policymakers surprised markets by cutting the overnight cash rate to a record-low 1.75%, the minutes will be likely to provoke significant volatility.
In addition to the RBA’s policy statement, the Australian Dollar is likely to see changes in response to the Performance of Construction Index.
Euro (EUR) Exchange Rate Forecast: US Data in Focus
During yesterday’s European session, the single currency struggled across the board in response to the publication of the European Central Bank’s (ECB) monthly economic bulletin. The report repeated tired rhetoric with policymakers continuing to express willingness to make policy even more accommodative in necessary.
Although there will be some significant domestic data today, Euro exchange rates will most likely see volatility in response to US Change in Non-Farm Payrolls and Unemployment Rate reports. This is thanks to EUR/USD negative correlation. It should be noted that US data is also likely to have a significant impact on the Australian Dollar.
With that said, European ecostats may cause movement given that they will print ahead of the US data. Traders will therefore be likely to concentrate on the German Construction PMI and the German Retail PMI.
During Thursday’s European session, the Australian Dollar to Euro (AUD/EUR) exchange rate was trending within the range of 0.6490 to 0.6568.