John from Moneycorp

The Euro vs Australian dollar

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    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.

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    Hi all,

     

    please find latest below the latest update

     

    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

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    The latest Euro/Australian dollar update is below - thanks

     

    After falling to the bottom of the pile a week earlier the Aussie was the top performer among major currencies in the last seven days. It strengthened by five cents against the euro, four cents against the British pound and three against the US dollar.

     

    Neither Euroland nor Australia could come up with any particularly impressive economic statistics. The euro zone continued to report falling activity in the services sector and declining retail sales. In Australia house prices were up by 5.1% in the year to June and unemployment was steady at 5.7%.

    Paradoxically it was an interest rate cut by the Reserve Bank of Australia that sparked the Aussie's upward move. The Cash Rate reduction from 2.75% to 2.5% had been widely expected, so had little negative impact, but in its statement the RBA indicated it had no plans for any further rate cuts. That was a surprise to investors and they hurried to buy back the Aussie dollars they had sold short.

     

    Other than consumer confidence there are no important Australia data announcements this week. Euroland reports on industrial production, inflation and the performance of the economy in the second quarter of the year. Analysts reckon gross domestic product expanded by an almost invisible 0.1%. A negative number would mean continued recession and would not be good news for the euro.

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    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.

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    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.

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    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.

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    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.

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    Hi John,

    I've noticed a rise of the Euro/Dollar, after a negative trend that lasted for a couple of months.

    Can you explain what caused that change? And will it keep rising in the next days/weeks?

    Thanks in advance.

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    Recently, the Australian dollar has been stronger against a number of currencies.

     

    Over the past week, the Aussie has taken around two cents off the euro - the Aussie's biggest boost has not come from Australia but from Washington D.C., where the politicians in Congress agreed a last minute deal to allow the Treasury to borrow more money and keep the government in business. It was not a very satisfactory deal for the dollar because it only postponed the day of reckoning until the New Year, when the whole bitter wrangle will kick off again.

     

    In terms of what will shape and impact the EUR/AUD exchange rate over the coming weeks/months – economic data released from the Eurozone and Australia will be a factor (eg interest rate accountments).

     

    Also, the situation in the US in relation to debt could influence the attitude to risk (Aussie dollar known as a “risk” currency) – in addition, any news from China can also affect the Australian dollar.

     

    If you need to make any currency transfers, it is worth exploring the different ways you can buy your currency. Further information on these can be read here - http://moneytransfer.pomsinoz.com/various-ways-to-buy-currency.html

     

    Thanks

     

    John

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    Please find the 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.

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    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.

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    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.

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    Latest review is below, thanks.

     

    The euro lost two thirds of a cent to the Australian dollar and a third of a cent to sterling. It was therefore not the best-performing currency over the last week but it was surely the luckiest.

     

    In just a couple of hours last Thursday came the news that Euroland inflation was still down at 0.7% and that a third of euro zone member nations saw their economies shrink in the first quarter of 2014. There was more to come: ZEW's survey of investor confidence found it slumping in Euroland and Germany even as the German stock market traded close to a record high. Yet those same investors retained enough confidence in the euro to ensure it remained almost unscathed by any of that news.

     

    There were not many Australian economic data and they were not particularly compelling but they were enough to keep the Aussie steady against the US dollar and to take it a quarter of a cent higher against sterling. NAB's index of business confidence improved by two points to 6, keeping it in the horizontal trend that has held good for the last six months. House prices advanced by a annual 10.9% in March, the strongest increase in three years. Mortgage lending was down though, and vehicle sales were flat.

     

    The Aussie's superiority last week was a continuation of the trend that has been in place for four months. From the Australian dollar's weakest point around A$1.58 on 23 January it has strengthened by 7%. It is not the top performer in the year to date; that honour goes to the New Zealand dollar by a narrow margin. But investors still like the Aussie, not least because its 2.5% benchmark interest rate totally eclipses Britain's 0.5%, Euroland's 0.25% and the near-zero rates of America and Japan. That relationship will doubtless change once US interest rates begin to head higher but that moment is not imminent.

    Edited by John from Moneycorp

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    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.

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    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.

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    The Aussie setitself up for a fall this week as the good early data was replaced by someterrible unemployment numbers mid week. The AUD initially did well, hitting 2month highs against Sterlingas inflation pushed higher, retail sales beat estimates, the service sectoredged towards the crucial growth level of 50 and the trade deficit shrunk. Italso made some gains against the other commodity currencies, but struggledversus the Yen and Swiss Franc.

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

    In theirrelease they again said that the currency ‘remains high by historicalstandards’ but they didn’t need to be more specific, the unemployment numbershad done the job for them. Not much out next week, some confidence numbers andmore inflation data, but it remains to be seen if there is follow-throughselling. After all, yields still look good compared to other G10 countries andinvestors continue to transact ‘carry trades’.

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

    Euro data wasdisappointing, but worryingly, most of the bad news came out of Germany. Poorconfidence numbers, weak factory orders, below forecast industrial productionand a lower trade surplus all gave cause for concern for the bloc’s biggesteconomy. Italy fell backinto recession after negative GDP numbers and it was left up to France to havethe only positive numbers for a change.

    The EuropeanCentral Bank (ECB) kept rates unchanged but President Mario Draghi acknowledgedthe 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, ordeflation risk over the medium term. The euro continues to defy gravity in theface of continued poor data and geopolitical issues, perhaps only more ECBaction will send it lower.

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    Latest Euro/Australian dollar 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.

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    Latest update is below.

     

    Over the last month the euro has ranged between A$1.42 and A$1.47 and has averaged A$1.4450. It is very close to that level today and almost exactly in the middle of the month's range. The movement of the Aussie against the euro over the previous month was similar, though within a narrower range.

     

    The Reserve Bank of Australia continues to argue that the value of its currency is high by historical standards and that, according to the economic fundamentals, the Aussie is stronger than it should be. Even so, when investors look at the Australian dollar they see a AAA-rated country and a 2.5% Cash Rate which compares favourably with the 2.3% rate of inflation. The difference is not massive but at least it is in the investor's favour.

     

    The European Central Bank claims not to have an exchange rate policy and seldom comments on the strength of the euro. That said, the ECB is probably just as keen as the RBA to see its currency weaken, if only to help it in its efforts to bring inflation back up to the "2% or just below" target. At the moment inflation in Euroland is just 0.4% and the ECB's Refinancing Rate is 0.05%. There is nothing attractive to investors about that relationship; it means the value of money on deposit is being eroded more quickly than it is boosted by interest income.

     

    Both central banks have their eye on a further relaxation of monetary policy. In the case of the RBA such a move would be likely to be in the shape of a cut in the Cash Rate, though the RBA says it expects interest rates to remain steady for the next year or more. As for the ECB, its scope to cut interest rates any further is minimal. It already charges commercial banks a negative -0.2% rate of interest on their balances.

     

    What the ECB has not tried yet, and what until recently investors thought it would never get around to, is quantitative easing; printing money on an industrial scale. The central banks in Britain and America have both run QE programmes and their economies are expanding. The ECB hasn't, apparently because Germany has a strong moral objection to the idea.

     

    However, the ECB president said in early November that the bank's Governing Council was unanimously ready to use more "unconventional" measures (implicitly QE), should inflation remain too low for too long. Investors were somewhat surprised and reacted by selling the euro. But there is unlikely to be any major downward pressure on the euro unless and until the ECB really does go down the path of QE. As long as it doesn't, the value of the euro will not be diluted in the way the values of the US dollar and the pound have been.

     

    There is every chance, then, that the month ahead will look very much like the previous two as far as the euro/Aussie exchange rate is concerned. It would not be a surprise to see both currencies losing some ground to the US dollar and the British pound.

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    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.

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    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.

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    Latest update below, thanks

     

    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.

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    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.

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    Monthly review is below.

     

    Things looked up for the euro in July, after investors fell in with the idea that Greece's prime minister was serious in his intention to obey the demands of the nation's creditors. The pointless referendum was forgotten and the focus switched to the preparatory work towards negotiations on a third bailout. Greece received a bridging loan from the EC which was promptly handed back to the European Central Bank in settlement of its maturing loan to the country.

     

    The referendum bluff was not without cost though. Greece's banks remained closed for three weeks and the Athens stock market for five. Bank share prices fell sharply when the stock exchange reopened. Greek manufacturers suffered a serious slowdown. Nevertheless, the bailout negotiations are said to be progressing towards an agreement in early August. Finland believes a fresh bailout will be ineffective and Germany is not keen to take part but those niggles are not of great concern to investors, for whom any agreement is better than none.

     

    The Australian dollar spent July on the defensive. Its problems were the same ones that had dogged it since March; falling commodity prices, slowing growth in China and the fear that the Reserve Bank of Australia might take interest rates even lower. The RBA governor fed that last concern, saying a couple of times in July that further rate cuts were "still on the table" in monetary policy discussions.

     

    That all changed in early August (well, not all; commodity prices remained soft). When the RBA announced that it was keeping its benchmark interest rate steady at 2% the statement did not include the usual tirade about the Aussie being overvalued. The omission astonished investors and they took the dollar higher. They took it higher again two days later when the RBA issued another statement, this time about monetary policy. Not only was the central bank surprisingly upbeat about the economy, it banished any idea of another interest rate cut. The Aussie rallied again.

     

    The net result is that over the last month, and largely by accident, the euro and the Australian dollar are unchanged against one another, having covered a six-cent range along the way. Both are about 1.6% weaker against sterling and 1% weaker against the US dollar.

     

    Where their relationship goes next is anyone's guess. The ECB's money-printing stimulus, which will run at €60bn a month until next September, ought to weigh on the euro if only because it dilutes the value of existing money. But low prices and low demand for Australia's mineral exports will mean low demand for the Australian dollar too.

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