The Australian dollar, like all other major currency pairs, put in a stellar rally against the euro overnight, adding 2% on the back of renewed speculation that the European central bank (ECB) will announce new monetary policy easing measures, most likely at its next meeting in December.
From the moment ECB president Mario Draghi’s press conference began, following the conclusion of the bank’s October monetary policy meeting, the AUD/EUR leapt higher, rising from .6367 to as high as .6498 in the hours following the event.
“ECB president Draghi stepped up to the plate last night, setting equity markets alight and scuttling the EUR,” David de Garis, senior economist at the NAB, wrote in his morning note.
“Rather than an expected non-event, Draghi effectively preannounced further easing in policy at its 3 December meeting saying that the “strength and persistence” concerns of growth prospects in emerging markets and possible repercussions for the Eurozone economy from developments in financial and commodity markets – which are slowing the return to inflation to target means the “degree of monetary policy accommodation will need to be re-examined added to is at our December policy meeting”. More policy accommodation is on for December, whether that means extending QE, beefing up QE now, and/or another cut in interest rates taking the deposit rate further into negative territory.”
Essentially, Draghi told markets what he intends to do in December without actually doing it on this occasion.
This morning the Australian dollar buys .6482 euro cents, fractionally below the overnight high of .6498 struck during the US session.
While the Aussie rallied hard against euro, it was a different story against the US dollar with the AUD/USD trading in a relatively thin range between .7184 to .7237 throughout European and US trade. As of 8.30am AEDT the AUD/USD currently buys .7202, almost exactly where Asia left it trading yesterday.
Looking ahead to Friday’s session, risk events are thin on the ground — both domestically and regionally. Chinese house price data for September — something that has been showing renewed signs of growth in recent months, along with the flash Japanese manufacturing PMI report from Nikkei-Markit, are the headline acts on what is a quiet session for data events in Asia.
Here’s the Aussie dollar scoreboard.
- AUD/USD 0.7202 , -0.0002 , -0.03%
- AUD/JPY 86.92 , 0.00 , 0.00%
- AUD/CNY 4.5788 , -0.0013 , -0.03%
- AUD/EUR 0.6482 , -0.0004 , -0.06%
- AUD/GBP 0.4678 , -0.0001 , -0.02%
- AUD/NZD 1.0615 , 0.0019 , 0.18%