AUD/EUR Outlook:
The AUD/EUR rate is currently performing well, trading 3.3% above its recent average. As the Australian dollar benefits from rising commodity prices and positive inflation outlooks, it has the potential to maintain its upward trajectory despite prevailing uncertainties.
Key drivers:
• Rate gap: The Reserve Bank of Australia's recent interest rate hike creates a positive yield differential, supporting the AUD against the EUR.
• Risk/commodities: With oil prices near 90-day highs, higher energy costs may favor the AUD due to its commodity export links, especially in the context of global inflation.
• One macro factor: Recent manufacturing data from China could directly impact demand for Australian exports; a contraction would pressurize the AUD.
Range:
Expect the AUD/EUR to drift within its current range, likely holding near recent highs.
What could change it:
• Upside risk: Stronger-than-expected Chinese economic data could bolster the AUD further.
• Downside risk: Weaker retail sales data from Germany may diminish support for the EUR, creating volatility.