Australian Dollar Euro 2017 Exchange Rate Surges on Fresh Risk Rally
The Australian Dollar Euro 2017 exchange rate started off the New Year with a rally as demand for commodity-correlated currencies improved, while investors grew concerned about the political and economic future of the Eurozone. AUD EUR spiked to above 0.69 during Tuesday’s European session.
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Australian Dollar (AUD) Bolstered by Risk Factors and Australian Manufacturing
Demand for the Euro has been poor this week and the Australian Dollar has been notably strong. Bouncing back from weeks of limp trade, AUD benefitted in the first trade sessions of 2017 thanks to high demand for risk assets as well as domestic data.
Tuesday’s Australian manufacturing PMI from AiG was expected to slip from 54.2 to 52.2, but instead came in with a solid 55.4. As a result, investors began to hope for strong economic performance from Australia during the first quarter of 2017.
Risk factors benefitting the ‘Aussie’ this week include news that iron ore prices soared 81% throughout 2016 and continued to perform solidly this week. Hopes for other commodities like oil to also have a solid 2017 have left AUD more appealing.
Euro (EUR) Weaker on 2017 Outlook Despite Solid Ecostats
The Euro’s long-term outlook has held it back this week. With 2017 finally upon us, EUR traders have become increasingly jittery looking ahead, amid concerns that populist politics like nationalism and protectionism may rise in the bloc as they have done in Britain and the US over the last year.
The possibility of a Eurozone nation pulling out of the bloc is perceived as one of the biggest potential threats to the shared currency.
The Euro’s weakness has been despite solid Eurozone ecostats published thus far this week. Tuesday’s final December manufacturing PMIs from the bloc met expectations, hitting 54.9 overall. December German unemployment results also impressed, with unemployment dropping by a strong -17k despite being projected to only fall -5k.
Australian Dollar Euro 2017 Forecast: Risk Rally May be Limited
Demand for the ‘Aussie’ this week has been highly dependent on the appeal of risky investments. This sentiment is likely to fall in the coming weeks as global markets are thrown into uncertainty amid the beginning of Donald Trump’s US Presidency.
As a result, the Australian Dollar Euro 2017 exchange rate’s current bullishness is expected to fade. However, the pair could continue to see an upward trajectory due to weakness in the Euro.
The coming week’s Eurozone data includes final Markit December PMIs as well as December inflation projections on Wednesday. Retail PMIs will be published on Thursday, followed by Eurozone retail sales on Friday.
Australian data will be a little quieter, with the service PMI publishing during Thursday’s Asian session and trade balance results from November on Friday. If these figures beat expectations however, AUD EUR could take advantage of underlying Euro weakness and sustain gains this week.
AUD EUR Interbank Rate
At the time of writing, the Australian Dollar Euro 2017 exchange rate trended in the region of 0.69, while the Euro Australian Dollar exchange rate traded at around 1.44.