Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast: Will Euro Soften on ECB Remarks and Grexit Fears?

The Euro to Australian Dollar (EUR/AUD) exchange rate remained in a tight range during Thursday’s session as weak Australian Retail Sales figures kept the ‘Aussie’ lower, and the European Central Bank (ECB) cut off direct funds to Greece amid negotiations softening the Euro. The Euro exchange rate has remained rather buoyant of late as investors speculated that the possibility of a Greek exit from the Eurozone is slim. However, negotiations between Greece and the Troika appear to be getting more heated and the ECB has now restricted Greece’s access to liquidity.

Industry expert Gary Jenkins commented: ‘Greek financial institutions will still have access to liquidity via the emergency liquidity assistance programme via the Greek central bank, although the ECB gets to review this use every two weeks. So a very large warning shot has been fired across the Greek bows by the ECB.’
‘It is difficult to see this as anything other than a very aggressive move by the ECB. They did not need to do it now (they were expected to make a decision at the end of the month) and whilst they claim that they are following their rules they have oft amended them during the crisis, as has the Eurozone as a whole. After all, there are not supposed to be any bail outs…’

Meanwhile, the Australian Dollar to Euro (AUD/EUR) exchange rate was offered little support after some unfavourable Aussie data emerged and oil prices continued to fall. Australian HIA New Home Sales declined by -1.9% in December after November’s 2.2% growth. Australian Retail Sales grew by 0.2% in December, a little short of the 0.3% forecast.
In addition, the People’s Bank of China (PBOC) made a surprise cut to its Reserve Requirement Ratio (RRR) in an attempt to stimulate growth–a development that offered the Australian commodity currency a little support.
Read more Click here / www.trade4x.net