The inflating effect of the Russian invasion of Ukraine on energy prices hurts the euro and helps the Aussie pushing up the AUD/EUR rate.
Due to the Eurozone’s reliance on gas from Russia, the euro remains vulnerable with AUD/EUR at a 5-year High in August near 0.70, whereas it had been approaching 0.60 in early February before the start of Putin’s so called Russian ‘special miliary operation’ in Ukraine.
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The effect of Ukraine crisis on energy prices hurts the euro and helps the gas and oil exporting Aussie dollar.
Before the war in Ukraine started to affect the Euro, changing expectations around US Federal Reserve policy and a less positive outlook for global growth weighed on the Aussie to Euro rate last year dropping to 0.61 in September.
Note that forecasts and predictions for the AUD/EUR exchange rate change all the time, affected by news events and relative sentiment towards the Australian and Eurozone economies and this exchange rate is even more volatile than usual because of the uncertainties around the pandemic.
ANZ Bank forecast the AUD to regain some ground by the end of the year to US70¢.
While NAB see the Aussie dollar to be range bound between US65¢ to US70¢, testing the lower end at the some point through to the end of the year.
Major banks are forecasting the eurozone common currency to fall to $0.95 by the end of the year.
This multi-year low for the euro vs the US dollar looks only to worsen as winter approaches; the short term news for the single currency is all negative.
Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.