The Euro vs Australian dollar

[John From Moneycorp]

Hi all

 

I’ve had a few requests from members asking for a regular currency update on the Euro/Australian dollar. It appears lots of you have money transfer requirements from Euros into Aussie dollars and vice versa.

 

Please see below for the latest update – thanks.

 

The Euro vs Australian dollar

 

The Aussie dollar put in a better performance, strengthening by three quarters of a cent against the euro. That only neutralised half the previous week's loss but it did show that the Australian dollar can go up as well as down.

 

Neither Euroland nor Australia offered much in the way of useful economic data. Investors had to make do with tedious statistics such as the 7.1% increase in Australian vehicle sales and the rise in euro zone inflation from 1.4% to 1.6%.

 

The Australian dollar's main boost came from Washington, where the US central bank chief was trying to play down fears of an early end to the $85bn-a-month he is currently pumping into the American economy. He reassured investors that the money tap will remain fully open for the foreseeable future, helping not only the US economy but also that of China, the country that buys the bulk of Australia's iron ore and coal exports.

[Levi]

Thanks for this, a very good idea. I've subscribed to the thread.

[John From Moneycorp]

Hi All,

 

Please find latest update below.

 

The Australian dollar continued its yoyo oscillation, handing back the three-quarter-cent advantage it had squeezed out of the previous week. Compared with a month ago the Aussie is down by two and a half cents against the euro.

 

It had a particularly difficult day on Wednesday. A reported slowdown in Chinese manufacturing was bad news because it suggested reduced demand for Australia's iron and coal exports from its biggest customer. Coming out at almost exactly the same time were figures showing a fall in Australia's inflation rate and bringing the threat of lower interest rates. Both stories made the Aussie less attractive to investors.

 

The euro's advantage came from positive economic news. A monthly survey of firms across Euroland found a majority of them reporting a pick-up in business. Although the figures were only provisional, investors were pleasantly surprised and became better-disposed to the euro.

 

The finalised data will be released this week, as will the equivalent Australian readings. But investors' main focus will be on the European Central Bank's press conference on Thursday afternoon. In recent months these monthly gatherings have often set the euro moving.

[John From Moneycorp]

Latest Euro/Australian dollar update is below, thanks.

 

The Australian dollar was almost unchanged against the euro and the US dollar. It lost ground to the British pound, as did almost every other major currency.

 

The Australian economic statistics, upon which investors at least partly base their decisions to buy or sell the currency, were not mediocre. Business confidence was shaky, as it has been for the last 18 months, but consumer confidence improved. And that was just about all investors had to go on.

 

There was no greater excitement to be found among the economic evidence from Euroland either. Investors thought they were onto something when they saw the French and German economies had grown more quickly in the second quarter of the year, and they started to look for similarly punchy figures from the euro zone as a whole. But they were disappointed. Euroland's economy grew by just 0.3%. It was enough to bring to an end the long recession but 0.3% growth over three months is not really growth at all.

 

With Euroland in the middle of its traditional vacation month, a bank holiday last Thursday for Assumption day and the German election campaigns swinging into action, investors had every reason to do as little as possible with the euro. Their motivation to get involved with the Aussie was scarcely any greater so the two currencies were left largely to their own devices, hence the lack of relative movement. The week ahead could be equally as dull.

[John From Moneycorp]

Latest Euro/Australian dollar update is below, thanks.

 

The Australian dollar was the top performer among the dozen most actively-traded currencies, narrowly beating its partner in crime, the New Zealand dollar. It strengthened by four cents against the euro and by three and a half against the British pound.

Broadly, all the commodity-related currencies had a good week while the classic "majors" - the US dollar, the Swiss franc, the Japanese yen and the Swiss franc - performed poorly. The economic data from China and the West were mostly upbeat, pointing to increased demand for commodities and for the currencies of the countries that produce them.

 

Some of the Australian news was less than sparkling, such as a second month of stalled retail sales and an unexpected monthly trade deficit. It was not all disappointment though. Economic growth of 0.6% in the second quarter of the year helped dampen expectations of another interest rate cut by the Reserve Bank of Australia. The victory of Tony Abbott's coalition in the general election was also seen as a positive, though the Aussie did not strengthen far on the news.

 

The euro was marred by mediocrity. A monthly survey of industrial and commercial firms showed increasing activity across the board, for the first time in years, but the acceleration was slow. Where the Australian economy expanded by 0.6% in the second quarter, that of Euroland grew by only half as much.

 

There were also some areas of concern; Austrian unemployment was higher, French business activity was still slowing and German industrial production was down in July.

 

After a year on the rise, the EUR/AUD exchange rate appears to have run out of steam. Further upward progress for the euro might be hard to come by in the near term.

[John From Moneycorp]

Latest Euro/Australian dollar update is below, thanks.

In the middle of the field the Aussie kept pace with the Swiss franc and the euro. It gained a cent and a quarter from the US dollar and lost a cent to the pound.

The Aussie was probably the week's unluckiest currency. Seven days ago it looked as though it could be turning a corner after six months of relentless decline. Whilst that might still be the case, the Australian dollar came seriously unglued on Thursday morning after data unexpectedly showed the loss of nearly 11k jobs in August and an uptick in unemployment to 5.8%.

Pan-euro-zone economic data were in short supply. Investor confidence reached its highest level in more than two years while industrial production shrank in July, continuing its pattern of rising one month only to fall the next.

Regional elections in Bavaria, Germany, provided a taste of what might be to come from Sunday's national vote. The results suggested that Mrs Merkel will be able to form a coalition but that it will be of a different composition to the current setup. However, investors were reassured that she will probably remain as chancellor, one way or another, and they saw no reason to sell the euro.

For the Aussie, this week's most important events will be the various statements from the Reserve Bank of Australia, which could shed more light on the future course of interest rates and therefore on the fortunes of the Aussie itself. For the euro it will almost certainly be the German general election on Sunday; once it is out of the way Euroland will be back to business as usual, Greek bailouts and all.

[John From Moneycorp]

The latest Euro/Australian dollar update is below, thanks.

The commodity currencies were last week's winners. It was the South African rand that led the way with the New Zealand and Australian dollars not far behind. The euro and the US dollar kept each other company, unchanged against one another on the week. The Aussie strengthened by two thirds of a euro cent.

With investors' attention focused squarely on the budget negotiations in Washington the euro had little difficulty in maintaining a low profile. At the beginning of the week Brussels confirmed that Euroland's economy expanded by 0.3% in the second quarter of the year. Two days later the IMF forecast a contraction of -0.4% for calendar 2013, followed by 1.0% growth next year. From a Federal point of view the euro zone had little else to offer.

As the week progressed investors became steadily more confident that the warring politicians on Capitol Hill would not drive the United states over the brink of default by refusing to approve an increase to the "debt ceiling", the aggregate limit on the amount the government can borrow. With that in mind they shunned the safe-haven Japanese yen and reinvested in the allegedly more "risky" commodity-oriented currencies including the Australian and New Zealand dollars. The Australian economic data helped that cause; more than 9k more people found work in September and the unemployment rate fell from 5.8% to 5.6%.

In the coming week the political battle in Washington will continue to dominate investors' thoughts. Only the most pessimistic of them can contemplate America failing to honour its debts but most can easily imagine that the brinkmanship politicking will have an effect on the value of the US dollar and other currencies. They just don't know what effect it will be. When the pundits describe the impact of a US default as "unimaginable" that is exactly what they mean; nobody can imagine what it would be.

[John From Moneycorp]

The latest Euro/Australian dollar update is below, thanks.

 

For the euro and the Australian dollar it was a fairly dull week. Between them, the Japanese yen, the New Zealand dollar and the British pound there was hardly room to fit a cigarette paper. The Australian dollar ended up ahead of the euro by a quarter of a cent but such a small change was not significant.

 

In Euroland the monthly round of purchasing managers index readings continued with the services sector. As expected, France and Italy both reported falling activity and Germany showed continued growth. The surprise was Spain, which delivered the strongest reading of all. Less impressive were a record low Euroland core inflation rate of 0.7% and a near-record high 12.1% unemployment rate. At Thursday's monthly press conference the European Central Bank president announced no new remedy to address those two issues but investors were not unduly concerned because they had not anticipated any.

 

The Aussie's salvation was investors' concentration on other, bigger, stories, especially those relating to the disappointing employment situation in North America where Canada was a net loser of jobs in December and the United States saw far fewer new hirings than investors had expected.

 

The Australian numbers were not great but they were not high-profile failures. The trade deficit narrowed and the construction sector expanded by a monthly 7.5%. Retail sales grew by 0.7% in November, more than twice as much as expected. Having vented their spleen on the Aussie last year investors seem less anxious to repeat the process in 2014.

 

Nevertheless, the Aussie's new year rally fizzled out as quickly as it began. The euro's upward trend, which dates back 18 months, remains intact.

[John From Moneycorp]

Please find latest EUR/AUD currency update below – thanks.

The euro and the Aussie were almost at opposite ends of the scale, the Australian dollar languishing among the laggards while the euro moved ahead with the leaders. On the week the Australian dollar lost two thirds of a cent to the US dollar, two and a half cents to the British pound and three cents to the euro.

Some of the euro's support arose from better than expected euro zone economic data. Most of it appeared after investors were spooked by weak Chinese ecostats and shifted their money from "risky" emerging-market and commodity currencies into safe havens, including the euro. The fear was that a slowdown in China, coupled with the wind-down of the US Federal Reserve's stimulative money printing, would have dampening effect on emerging economies and on the countries which send a high proportion of their commodity exports to them and to China itself.

At one point on Wednesday the Aussie was looking good, following higher than expected Australian inflation data, but there was no lasting escape from its steadily downward trend. Thursday was particularly painful when those weak Chinese data sparked a flight to quality and the abandonment of "risky" commodity currencies. The Canadian dollar suffered just as much as the Aussie and the South African rand fell even further.

The coming week's agenda includes no statistics of crucial importance to the Australian dollar. The important Euroland figures cover inflation, confidence and unemployment. One important threat - or opportunity - still facing the euro is the overdue decision of Germany's constitutional court on whether or not the European Central Bank can buy government bonds. The euro is almost certain to react to the verdict when it comes out; up for yes, down for no.

[John From Moneycorp]

Latest EUR/AUD update is below, thanks

 

The British pound steamed away from the rest of the major currency opposition, invigorated by the UK unemployment rate falling below 7%. The euro and the Australian dollar were left bobbing in sterling's wake, putting in similar performances. They were unchanged against one another on the week, falling by -0.3% against the US dollar and by -0.8% against the pound.

 

In neither case did the two currencies have to cope with particularly bad news or economic data but nor was there anything to encourage investors to buy them. There were only a couple of significant Euroland economic statistics - investor confidence and inflation - and both were disappointing. The confidence measures were softer than expected and the inflation figure was exactly as expected at 0.5%, one and a half percentage points below where it is supposed to be.

 

The Aussie did not get much help from the economic statistics or from its own central bank either. The Melbourne Institute's leading index, a compilation of other data which tries to predict future economic performance, came in at 0.0%, pointing neither to growth nor recession. Business confidence deteriorated slightly. Vehicle sales were down. The Reserve Bank of Australia noted again in the minutes of its April policy meeting that its currency is still "high by historical standards".

 

Holidays on Monday and Friday in Australia and parts of Euroland (Portugal and Italy also take Friday off) mean there will not be much opportunity for the two currencies to shine this week either. The euro's danger point will be a speech by the European Central Bank president on Thursday, during which there is a chance he could try to talk the currency down. For the Aussie it is Wednesday's inflation data: a low number could push higher interest rates even further into the future.

[John From Moneycorp]

Latest update is below, thanks.

 

The Australian dollar shared the wooden spoon with the US dollar, falling by three quarters of a cent against the euro and by more than a cent against sterling. Whilst none of the Australian ecostats was truly awful, most of them were at best mediocre. Purchasing managers' index readings from the manufacturing and services sectors both indicated further slippage, with manufacturing putting in its weakest performance since August last year. New home sales increased slightly in March but building permits were down by -3.5%. The trade surplus for that month was well below forecast, with imports flat and exports down by -2%. As expected, the Reserve Bank of Australia kept its benchmark interest rate steady at 2.5% and said in its statement that there is "likely to be a period of stability in interest rates".

 

The euro, on the other hand, had a fairly dull week. The two most important sets of Euroland economic data related to consumer prices and jobs. Both could have set the euro in motion but neither did. The rate of unemployment in the euro zone was a touch lower than expected but at 11.8% was still too high for comfort. Inflation accelerated from 0.5% to 0.7% The figure was slightly less than the 0.8% analysts had predicted and investors were not sure what to make of it. They decided it was a step in the right direction towards the European Central Bank's 2% target and that it would be high enough to avoid forcing the ECB's Governing Council into quantitative easing action at this Thursday's meeting.

 

Both currencies face potential challenges in the coming week. For the Aussie it will be Thursday's employment numbers that decide its short-term fate. Analysts find it next to impossible to make consistently accurate predictions of the Australian jobs figures. Consequently, investors' expectations are almost always confounded. The forecast for this week is that nearly 7k more people will have found jobs in April and that unemployment will be a tick higher at 5.9%. If the actual situation turns out to be much better or worse the Australian dollar will react by moving higher or lower.

 

The euro's big moment comes later the same day when the European Central Bank reveals whether or not it is taking action to drive up the inflation rate towards its 2% target. Investors do not expect it to do so this month - if at all - so any relaxation of monetary policy would come as a surprise and would be likely to send the euro lower.

[John From Moneycorp]

Latest Eur/Aud update is below.

 

Among the major currencies it was sterling that ruled the roost last week. The euro was somewhere in the middle of the pack and fighting it out at the rear were the Australian and New Zealand dollars. Overall the Aussie lost two and a quarter cents to sterling and a cent each to the US dollar and the euro.

 

As is often the case, the Australian dollar's biggest handicap was its central bank. In this instance the damage was done by Guy Debelle, an assistant governor of the Reserve Bank of Australia, and by the minutes of the recent RBA policy meeting. The minutes confirmed that Australian interest rates will remain at a record low "for some time yet" and Mr Debelle said in a speech that a decline in capital inflows would be likely to weaken the Australian dollar. It did not help that his comments came hard on the heels of a warning from Standard and Poor's that Australia could lose its AAA credit rating if the government does not cut spending.

 

Investors were reluctant to get involved with the euro and the few low-key Euroland economic data gave them little reason to do so. In the euro zone as a whole consumer confidence improved and business activity among services sector firms expanded more quickly but for manufacturing and the overall business community growth was more restrained in May. Figures from Germany showed business confidence fading slightly but the country's economy did grow by 0.8% in the first quarter of the year, a similar performance to that of Britain.

 

One reason for the euro being left on the sidelines was next Thursday's policy discussion at the European Central Bank. Although the event is still a week and a half away it is at the front of investors' minds because most of them expect it to result in lower interest rates. Inflation in Euroland is 0.7%, less than half the 2% target rate, and a third of euro zone member states saw their economies shrink in the first quarter. Against that background investors imagine that if the ECB were to continue to sit on its hands it would be accused of neglect. ECB President Mario Draghi appears to feel the same way. Twice in the last couple of weeks he has said the bank is ready to act and his most recent pronouncement on the matter was that"more pre-emptive action may be warranted".

 

Investors will have to wait until 5 June to see what that action will be. They are therefore treating the euro with a degree of caution at the moment.

[John From Moneycorp]

Hi all - the latest currency update is below, thanks.

 

Neither the euro nor the Australian dollar had a hugely exciting week. It was the euro that narrowly won the contest, not because of the excellence of the Euroland economic statistics but because it avoided accidents. The euro strengthened by 3/16 of a cent against the Aussie, a rather less than commanding margin.

 

Euro zone inflation figures last Monday got the euro off to a decent start. Although consumer prices went up by only 0.5% in the year to May, much less than the European Central Bank's target of 2%, the number confirmed the provisional reading released a fortnight earlier and came as something of a relief to investors, who had feared the rate of inflation could have been even lower. A weaker-than-expected index of investor sentiment in Germany was balanced by an above-forecast result for Euroland as a whole.

 

Left to its own devices the Australian dollar would have had a tough week. There were only a couple of economic statistics to guide investors and they were not very good: New vehicle sales clocked a ninth successive month of decline and leading indicators from two financial institutions came in at +0.1% and -0.1%, netting out to indicate zero growth. As well as those handicaps, the Reserve Bank of Australia hinted that if there were to be an early change to interest rates it would be more likely to be a cut than an increase.

 

However, the Aussie received help from outside. The US Federal Reserve renewed its commitment to keeping rates close to zero well into next year and Chinese manufacturers reported expanding activity for the first time in seven months. Investors saw both of those developments as positive for the Australian dollar.

 

If the ecostat agenda is anything to go by, the week ahead will be another low-profile one for both currencies. There are no top-level Australian or euro zone figures on the list and no scheduled appearances by central bank luminaries

[John From Moneycorp]

Latest Euro/Australian dollar update below, thanks.

The euro had to make do with second place in the majorcurrency league table last week. It lostto the US dollar by no more than a nose. The Australian dollar was exactly half way down the field, between theclass-leading American dollar and the last-placed South African rand. Over the week the Aussie lost a cent to theeuro.

So the euro clearly did well but it is surprisinglydifficult to justify why itsucceeded. The Euroland economic data certainlydid it few favours. Purchasing managers'index (PMI) figures failed to live up to the promise of their provisionalreadings a week earlier and most of them came in below forecast. Unemployment ticked lower in June but at11.5% it was still too high for comfort. Consumer confidence deteriorated. The provisional consumer price index for Julyshowed inflation slowing to 0.4%.

Yet the euro sailed serenely on. Investors were not worried by the fallinginflation rate and if that didn't bother them, nothing else was going to doso.

There were no top-tier Australian economic statistics toguide the market. Investors had to makewhat they could of new home sales going up while building permits went down andexport prices falling more than twice as quickly as import prices. They could not make much of them, hence theAussie's middle ranking.

The week ahead promises to be far more exciting, at leastfor the Australian dollar. On Tuesdaythe Reserve Bank of Australia reveals it latest interest rate decision. Whilst the RBA is expected to leave the CashRate unchanged at 2.5%, it would be a surprise if the statement were not tocontain at least a passing reference to the "overvalued" Australiandollar.

Thursday brings the Australian employment data, which have adisconcerting habit of surprising investors. The best guess is that unemployment will be steady at 6.0% and that another 13k people will have foundjobs. But that's all it is, a guess. Analystsfind it impossible to forecast the Australian jobs numbers with any degree ofaccuracy: in the last 12 months their average error has been 183%. Because of this, the Aussie usually heads offin one direction or the other as soon as the figures are announced.

Later on Thursday the European Central Bank president willhold his monthly press conference. It isconceivable, but not likely, that he will announce some new measure to tackleEuroland's vanishing inflation.

[John From Moneycorp]

The Aussie set itself up for a fall this week as the good early data was replaced by some terrible unemployment numbers mid week. The AUD initially did well, hitting 2 month highs against Sterling as inflation pushed higher, retail sales beat estimates, the service sector edged towards the crucial growth level of 50 and the trade deficit shrunk. It also made some gains against the other commodity currencies, but struggled versus the Yen and Swiss Franc.

 

However it wasn’t to last as the unemployment rate jumped to its highest level since 2002 as jobs were lost along the eastern seaboard. The Aussie quickly reversed all of its gains as it fell to 2 month lows against the US dollar and near 1.82 versus Sterling. The numbers were shocking, and were known by the central bank before they announced that rates were unchanged as expected.

 

In their release they again said that the currency ‘remains high by historical standards’ but they didn’t need to be more specific, the unemployment numbers had done the job for them. Not much out next week, some confidence numbers and more inflation data, but it remains to be seen if there is follow-through selling. After all, yields still look good compared to other G10 countries and investors continue to transact ‘carry trades’.

 

Given the poor numbers out of the euro zone this week the euro had a reasonable week, holding its own against Sterling and the US dollar, making some small gains against the Aussie, CAD and NZD but losing out against the Japanese Yen and Swiss franc as investors headed for safe have currencies on the back of geopolitical issues. In fact it hit a 9 month low against the Yen.

 

Euro data was disappointing, but worryingly, most of the bad news came out of Germany. Poor confidence numbers, weak factory orders, below forecast industrial production and a lower trade surplus all gave cause for concern for the bloc’s biggest economy. Italy fell back into recession after negative GDP numbers and it was left up to France to have the only positive numbers for a change.

 

The European Central Bank (ECB) kept rates unchanged but President Mario Draghi acknowledged the euro area’s economic recovery is at risk due to the global conflicts, specifically in Ukraine. He also said the Bank want to manage inflation, or deflation risk over the medium term. The euro continues to defy gravity in the face of continued poor data and geopolitical issues, perhaps only more ECB action will send it lower.

 

[John From Moneycorp]

Latest Euro/AUD update is below, thanks.

 

Another week of negative data out of the Eurozone with Germany being the main worry once again. The bloc’s biggest economy slipped into negative growth in the 2nd quarter, falling 0.2% (which was worse than forecast) while inflation fell to its lowest level since February 2010. Economic sentiment took a big hit with the influential ZEW survey falling nearly 20 points. It has now fallen in each of the last 7 months since reaching a 7 year high in December.

 

The other euro countries fared no better, with Italy also having negative GDP and France stagnating, all adding up to zero growth in the Eurozone as a whole. Euro-wide industrial production fell while inflation remains at its recent lows, all adding up to a headache for the central bank. Given all this bad news, you would expect the euro to be on the slide, but not so.

 

The single currency had a generally positive week, making strong gains against sterling after dovish interest rate comments from the Bank of England Governor and heading north versus the yen after easing geopolitical tensions saw safe-haven plays being unwound. It closed unchanged on the dollar, despite hitting near 9 month lows early in the week but lost a little against the commodity bloc. It’s the PMI’s this week which may not impress, so all eyes on the ECB in the weeks ahead. Will they push the easing button again?

 

The Aussie was one of the winners this week, helped by a number of factors, but not least the easing in geopolitical tensions. More positive data out of China gave all the commodity currencies a lift as did some disappointing sales numbers out of the US and those dovish UK comments. However, some good domestic data also got investors interested.

 

Business conditions rose to a 4 year high in July on the back of a surge in construction while confidence also rose. Consumer confidence improved sharply, up 6% since May’s federal budget that had seen it take a hit. All of the damage has now been repaired. With inflation also falling a little, the Aussie bulls were on the rampage.

 

The AUD rose to 2 month highs against sterling at one point, and all this appreciation won’t please the Governor of the Reserve Bank. Still he will be heartened that derivatives traders have now turned their most pessimistic on the Aussie since March, with interest rate futures markets now predicting a much bigger chance of an interest rate cut. We shall see, but with little important data this week, global politics could be the main focus of attention.

[John From Moneycorp]

An update below.

 

Between the middle of December and the middle of January the euro lost a dozen Australian cents, a fall of -8% from peak to trough. It recovered nine of those cents in late January and the first few days of February before heading lower again. The net result over the last month was a gain of two Australian cents for the euro. Over the same period the euro lost five and a quarter US cents and the Aussie lost four and three quarters.

Both currencies were hurt by central bank monetary policy. The euro was first to feel the pinch. After more than a year of vacillation the European Central Bank eventually grasped the nettle of quantitative easing. It is supposed to keep inflation in the euro zone "at or just below 2%" and nearly two years havepassed since it was at that level. When the inflation rate for calendar 2014 was confirmed at -0.2% (yes, that's deflation not inflation) the assumption was that the ECB would no longer to be able to avoid doing something about it.

At its policy meeting on 22 January the ECB Governing Council bowed to the inevitable and agreed a stimulus package of more than €100bn. The money will be printed between now and September next year and spent on bonds and similar such securities. The details have yet to be revealed but news of the QE programme immediately sent the euro lower.

Ahead of the ECB announcement the Swiss National Bank said it would abandon its three-year-long defence of the euro at SFr1.20. The SNB's purpose had been to protect Swissfirms from an over-strong franc but it decided that, once the ECB began to print money on an industrial scale, that strategy would be untenable. With the SNB out of the way the franc surged higher against the euro, adding to its woes.

In Australia it had been expected that the Reserve Bank of Australia would confirm in early February that it was inclined towards a lower benchmark interest rate. In fact the RBA surprised the market by not just hinting at a lower interest rate but actually delivering one. It cut its cash rate from 2.5% to 2.25% and there are plenty of analysts out there who think there will be a further reduction before the middle of the year.

In the same way the euro and the Australian dollar were both wounded by monetary, both have felt the sting of political risk too. Australia's prime minister survived a vote of no confidence in February and it is widely thought that it will not be the last such test for him. He might not be so lucky next time.

The euro's political test is Greece, where a new government was voted in on 25 January. The crypto-communist Syriza party - an acronym for Coalition of the Radical Left - came close to an outright win and formed a coalition with the right-wing Independent Greeks party. The Independent Greeks want exactly that; independence from the EU. Syriza'selection platform was more jobs and less austerity. Since they took power the prime minister and finance minister have toured Europe to garner support for a renegotiation of Greece's bailout terms. In essence, they want to pay a lower rate of interest on their borrowings and to be given some flexibility regarding the repayments.

To date they have been unsuccessful. Germany said nein and the ECB said it would no longer lend cheap money to the Greek banks. In theory, if no deal has been cut by the end of this month the scene would be set for Greece to be ejected from the single currency. The official line in Brussels and Frankfurt is that Greece's departure from the euro would be manageable and investors seem to have accepted that position. However, they might not be so relaxed about it if the unthinkable were actually to happen.

[John From Moneycorp]

During the first three of the last 28 days the euro was showing signs of spirit. The leaders of the new Greek government were talking to the EU and there was a sensation that Athens, Brussels and Frankfurt would eventually cobble together some sort of lash-up to keep Greece in business and the euro in one piece. Expectations were not high but investors were pinning such hopes as they had on the EU's legendary ability to kick cans down roads.

 

To an extent they were correct to do so. A month on, the can is about to get another kick but in the interim the euro has been surprisingly resilient. There is no doubt that it has weakened: compared with its levels in early February the euro is down by five Australian cents, two US cents and two and a half British pence. But the Swiss franc has fallen even further, losing two cents to the euro.

 

The two topics of overriding interest for the euro were quantitative easing and, of course, Greece. QE was expected to send the euro lower if it went well; Greece could have sent it lower if it went badly.

 

In both cases it was a waiting game. QE was not scheduled to get under way until March, not least because the ECB had a lot of preparatory work to do. Greece could go awry at any moment but few expected an early disaster. Sure enough, Athens conceded sufficient ground to be allowed to make its own decisions about the reforms it would put into effect. Unfortunately, until now those reforms have not met with the approval of the Eurogroup of finance ministers. The northern Europeans are particularly nervous about the plan to increase tax revenue by hiring tourists as secret tax inspectors.

 

Meanwhile the Australian dollar was keeping pace with the leaders. During most of February it was going nowhere fast but at the beginning of March the Aussie got an unexpected leg up from the Reserve Bank of Australia. Investors had expected that the RBA board would decide, at its meeting on 3 March, to lower its benchmark interest rate from 2.25% to 2%. Its failure to do so sent the dollar an instant cent higher and altered the way investors viewed the currency.

 

The following day's Australian gross domestic product figures showed the economy expanding by 0.5% in the fourth quarter of 2014. It was not a hugely impressive number but it was enough to beat the performance of many other developed countries.

 

So the story today is strangely similar to the one a month ago. The ECB has now begun its programme to print and spend €60bn a month and it will continue until next September, come what may. To an extent, investors will by now have priced into the euro the effect of the ECB's €1080bn spending spree. However it still looks likely that the euro will continue its downward slide, helped along every so often by a new crisis in Greece.

[FOL]

Hate it...2 months ago it was 1.52, now it's 10 cents less... I'll just keep my euro's for now as we got some AUD in our bank account already. But definitely want to transfer it over this year.

[John From Moneycorp]

In the first half of March the euro was on the retreat. During the second half and into early April it staged something of a counterattack. And after Easter it suffered a relapse. The euro rebounded against all the major currencies in the middle of March but never gave the impression that the bounce was any more than a correction. Sure enough, in mid-April the euro was back to the trough it had touched a month earlier against the US and Australian dollars.

 

The Aussie therefore had a better result than the euro over the month, strengthening by one and a third euro cents. It lost one US cent and strengthened by three and a quarter cents against sterling. The euro was up by a cent against the pound and lost two and a half US cents.

 

Perhaps the least surprising development - or lack of it - in Euroland over the period was the failure of leaders to advance the negotiations about Greece's bailout. The situation is no worse than it was a month ago but neither is it any better. Brussels has told the Greek government that if it wasn’t any more money it must propose a set of reforms that will bring its budget towards balance, in conformity with the conditions imposed by earlier bailouts. Athens has already missed two deadlines for this process; the next one falls on 15 April: nobody will be astonished if this one, too, is missed.

 

In the euro's favour, the economic data from Euroland showed further signs of improvement. For example, purchasing managers' index readings from the services sector, which measure private sector business activity on a scale of 0-100, were all above 50, signifying expansion. Even so, the ECB said it would not be distracted from its QE programme, which will continue until September next year with the central bank printing €60bn a month.

 

The Australian ecostats were rather less impressive. Australia has been deeply wounded by declining demand for its mining output and the prices it receives for them. Iron ore provides the most striking example. Five years ago iron ore sold for US$170 a ton. A year ago it went for $115 a ton. At the time of writing it is down to $50 a ton.

 

There was some help from the Reserve Bank of Australia though. The RBA was widely expected to cut its benchmark interest rate in early April. When it failed to do so the Aussie dollar bounced, even though the decision looked more like a postponement of the cut rather than its cancellation.

 

For a month now, investors have been trying to figure out whether to send the euro lower again or whether to back off. That decision will determine whether the EUR/AUD is lower or higher in a month's time. The best guess is that it will be lower but that's all it is; a guess.

[John From Moneycorp]

Latest update below.

 

During the middle two weeks in May there was minimal net change in the euro/Aussie exchange rate. Both currencies were losing ground to the American dollar, which had rediscovered its mojo after two months on the defensive. Towards the end of the month they diverged, the euro picking up ground against the US dollar while the Aussie carried on lower. At the beginning of June both currencies moved higher against the Greenback but the euro moved faster and further.

 

The net result is that the euro has strengthened by four Australian cents in the last month. Against the US dollar the euro is up by a cent while the Australian dollar has fallen by three. All of the commodity-oriented currencies had a fairly rough ride: the NZ dollar was down by almost twice as much as the Aussie and the South African rand fell even further than the Kiwi.

 

Most of the Australian economic statistics to emerge in May were either not helpful to the Aussie or actively unhelpful. Investors took a particularly dim view of a sharp quarterly fall in private sector investment. Things looked up in June though. The Reserve Bank of Australia failed to make the rate cut that some had feared and economic growth for the first quarter came in stronger than anticipated.

 

The euro zone economy grew by less than Australia's in Q1 and during the first three weeks of May the data coming out of Euroland were similarly uninspiring. Towards the end of the month the picture started to improve just as investors' attention was swinging back to the four-month-long spat between the Greek government and its creditors, the IMF/EC/ECB "troika".

 

Investors decided they liked what they saw, especially after the leaders of Germany, France and the troika held a special meeting in Berlin to put together a "final offer" to Athens. Since then, and despite the postponement of a €300 million repayment by Greece to the IMF, the broad view has been that neither Athens nor Euroland would benefit from Greece's default or its exit from the single currency. That being the case, they are more likely than not to come to a compromise.

 

But the deal is not yet done and both sides continue to stick to the "no surrender" line. Before the end of June Greece must repay €1.6 billion to the IMF, something it will be unable to do unless an agreement is reached and the bailout payments restarted. The euro is not out of the woods yet.

[Paddymacs]

Hey John

 

What do you think one should do if moving end of sept? I am setting my account up his week with one of your colleagues thanks for putting me in touch. Should we start to transfer some now or do it all in one go?

Edited June 10, 2015 by Paddymacs

[John From Moneycorp]

Please could you private message me your client identification number? I will then ask your Account Manager to contact you and they will discuss in more detail.

 

Thanks

 

John

Edited June 10, 2015 by John From Moneycorp

[Paddymacs]

Please could you private message me your client identification number? I will then ask your Account Manager to contact you and they will discuss in more detail.

 

Thanks

 

John

 

Thanks John I've done that.

[John From Moneycorp]

Latest update is below.

 

In the last 12 months the market value of coal has fallen by a third and the price of iron ore has halved. Both of those declines are the result of reduced demand, especially in China, and both commodities are staple exports for Australia, especially to China. It is no coincidence, then, that the Australian dollar has fallen by 20% against the Chinese yuan over those 12 months. It is also down by 16% against the US dollar and by 14% against sterling. Over the same period it has fallen by just 3% against the euro.

 

The change over the last month has been less dramatic, with the Aussie losing 4% to the US dollar and the pound and 3% to the euro. But the mood is the same among investors: they don't much fancy the euro but they like the Australian dollar even less.

 

Even so, it has been the euro hogging the headlines. Since the left-wing Syriza party came to power in Athens at the end of January there has been a running battle between Prime Minister Alexis Tsipras and the country's Troika of creditors - the International Monetary Fund, the European Central Bank and the European Commission. Greece's line has been to reject the austerity that is a condition of bailout loans from the Troika. The Troika's line is that its members have no desire to throw good money after bad: toe the line and get your act together or you're on your own.

 

Little more than a week ago Mr Tsipras called a referendum, asking the Greek people to vote No to the proposals proffered by the Troika, which would have provided fresh money in return for renewed austerity. They obliged him with a 61/39 vote for No. He then proceeded to ignore them completely and four days later went back, cap in hand, to the Troika. Four days later he accepted a bailout on significantly harsher terms than the one rejected by the referendum.

 

Greece will therefore stay in the euro, as everyone involved seemed to want, but the Greek people will pay a more terrible price than that demanded for similar measures a fortnight ago or at the end of last year.

 

Investors appear not to be convinced that this is the end of the road for Greece's inharmonious relationship with the euro zone. Following news of the agreement the euro initially strengthened but soon began to head lower. Where it goes next is anyone's guess, but the ECB's ongoing programme of quantitative easing, in which it will print €60bn of new money every month until next September, should limit any upside.