There should be enough momentum for the pair to extend the recent trend to around AUD/EUR 0.6850/0.6900 or EUR/AUD 1.45/1.46 in coming days and weeks, according to Sean Callow, Research Analyst at Westpac.
“It was virtually one-way traffic in April and May as the euro shed its political risk premium and the Aussie suffered from sliding commodity prices, most notably iron ore.”
“AUD has recovered some lost ground lately though, helped by firmer domestic data which has doused RBA rate cut talk. There should be enough momentum for the pair to extend the recent trend to around AUD/EUR 0.6850/0.6900 or EUR/AUD 1.45/1.46 in coming days and weeks.”
“But commodity prices are likely to keep a lid on AUD rallies, with iron ore and coal shipments recovering from weather interruptions and industrial demand growth looking fairly steady.”
“The ECB was careful not to encourage the hawks at its June meeting but did confirm greater optimism over the Eurozone economy. During Q3, there should be growing discussion about the ECB further reducing its monetary stimulus, supporting the euro. A strong current account surplus should also help the euro on crosses during thinner northern summer markets.”
“This should see AUD/EUR back to around 0.67, EUR/AUD to 1.4900/50 later in Q3.”
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