The AUD v EUR exchange rate was over 0.30% lower in the European session as traders continued to push the Euro currency higher. The Aussie to Euro pair was trading at 0.5720 after Eurozone growth figures were more positive than expected for the fourth quarter.
Further pressure on the Australian dollar was yesterday’s sell-off in commodities after a crash in the oil price or around 20% after OPEC failed to agree on new production cuts.
Eurozone growth higher as traders await ECB meeting
Eurozone growth figures for the year showed a 1% year-on-year gain, which was better than the 0.9% expected. This gave the Euro a small boost, but traders are aware that the first quarter of the year is when the recent virus problems will appear in economic growth.
The key event for the week is tomorrow’s European Central Bank (ECB) meeting where it is expected that the bank will take action to protect the economy from the virus. The U.S. Federal Reserve recently cut their key interest rate by 0.50% and the ECB is expected to take action, however interest rates are already at 0% for the bloc and they are running out of room to stimulate markets. Traders will be watching the meeting closely and some volatility is likely for the AUD to EUR pair.
Oil price drop rattles global markets
The Aussie dollar has seen further pressure after a drop in commodity prices. This was led by a crash of around 20% in oil prices, which saw losses in stock markets of up to 8%. The move came after Saudi Arabia failed to agree on production cuts with Russia and this led to Saudi slashing the price of their oil and increasing their own production to punish other players in the market.
Oil touched a low of $28.00 in yesterday’s trading but has recovered today with a 10% move higher. The recovery has helped to boost stocks but the lower prices will have repercussions for the energy sector down the line.
The Aussie dollar is one of the “commodity currencies” that sees it fate tied to the price of metals and oil. This latest drop is another headwind for the Aussie currency as it seeks to recover losses versus the Euro currency. A spread of more virus cases down under, alongside an expected Reserve Bank of Australia cut next month are weighing on the currency but the ECB may help to spur a recovery with aggressive policy action tomorrow.
If you would like to learn more on factors influencing AUD/EUR exchange rates for an upcoming currency transfer, feel free to contact myself, Royston Howell, using the form below.