EURAUD is the ticker symbol for the euro to Australian dollar exchange rate in the forex markets. The euro and the Australian dollar are considered major currencies. Still, the EURAUD is regarded as a minor pair because it does not constitute the US dollar (the world’s most traded currency). Minor currency pairs are typically less liquid and more volatile than major pairs. They are generally traded with relatively wider spreads than major currencies.
In the EURAUD Forex rate, the EUR is the base currency, whereas the AUD is the quote currency. This means that at any given time, the price of the EURAUD represents the amount of Australian dollars it would take to exchange for one unit of the euro (1 euro to AUD).
History of EURAUD
The euro to AUD currency pair combines the 2nd and 5th most traded currencies, respectively (March 2022). It is a versatile currency pair that is sometimes considered a barometer for global risk. The pair tends to drift lower in periods of high risk and higher in periods of low risk. Both the EUR and the AUD also have fascinating histories.
The euro was introduced in 1999, making it one of the youngest currencies in the world. It is the official currency of the Eurozone, a monetary union of 19 states within the EU. The euro has risen to become the second most potent currency globally (behind just the US dollar), and at least 22 countries have pegged their national currencies to it. The idea of a common European currency was agreed on in 1992 upon signing the Maastricht Treaty. Still, there were always political and economic motivations since the end of World War II. The euro has largely been very successful; it has helped boost trade and investment, facilitate efficient payments, and enhance financial and economic stability within the European Union. The Eurozone is a robust, diverse, and modern economic bloc. Some of the leading economies within the region include Germany, France, Italy, Spain, and the Netherlands.
On the other hand, the Australian dollar is the official currency of Australia, Norfolk Island, Cocos Island, and Christmas Island. The AUD is also the legal tender in Nauru, Tuvalu, and Kiribati. It was introduced in 1966 to replace the Australian pound. The AUD is decimalized (subdivided into 100 cents). It was meant to replace the pound that followed the complex Sterling system – the pound was divided into 20 shillings, further divided into 12 pence (so 1 pound equalled 240 pence). Australia has risen to be a major player in the global economy, supported by the 3Gs: geology, geography, and government. The country boasts a unique location endowed with numerous natural resources, and favourable government policies complement it. The AUD is a major ‘commodity dollar’, with Australia known as a major producer and exporter of minerals and metals such as gold, oil, coal, iron ore, as well as several agricultural products. As a ‘commodity dollar’, the AUD tends to appreciate when global commodity prices appreciate, and vice versa. The AUD is also a high-yielding currency used for ‘carry trade’ strategies.
EURAUD Historical Price Performance
The EUR/AUD currency pair traded around 1.60 at the turn of the millennium. After a long period of trending sideways, it started drifting upwards in mid-2008 and hit a high of circa 2.02 by the end of that year. It then entered a sharp downtrend that saw it dip to lows of circa 1.17 by mid-2012. After hitting that trough, EURAUD entered a period of steady growth and managed to print a high at around 1.80 in March 2022. It has since fallen from those heights and trades around the 1.50-region as of the end of March 2022.
Major Bodies Influencing EURAUD – EUR To AUD Trading
Here are some factors to look out for when you engage in EUR/AUD trading:
The European Central Bank (ECB)
The ECB is the central banking system of the Eurozone. It is mandated to ensure price stability. The bank sets interest rates every month, accompanying their monetary policy statements. These are high-impact events for the euro. The ECB has, in recent years, also been active in the forex markets, and it is famous for implementing aggressive quantitative easing programs to help protect the economies of the Eurozone. The pace of winding down or boosting the program continues to have a massive impact on the single currency.
Reserve Bank of Australia (RBA)
The RBA is the central bank of Australia. It has a mandate of ensuring the stability of the AUD and promoting economic prosperity for the people of Australia. The RBA releases the official cash rate and its monetary policy statement on the first Tuesday of every month (except January). The RBA is known to be an active central bank, and its events have a huge impact on the value of the AUD.
Australian Bureau of Statistics (ABS)
The ABS is the national statistics agency of Australia. It is tasked with collecting, organizing, and publishing essential statistics on Australia’s economy, life, and society. Some of its most important economic indicators that influence the AUD include the Unemployment Rate, Consumer Price Index, and Trade Balance.
Currency correlations can help traders identify excellent trading opportunities and avoid increasing their risk exposure in the markets. The EURAUD’s top positively correlated pairs are the EURNZD, GPBAUD, GBPNZD, and EURCAD. The pair’s top negatively correlated pairs are the AUDSGD, AUDCHF, XAUJPY, and NZDCAD.
** Disclaimer –While due research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.