EUR/AUD Exchange Rate Rises as Risk-Off Markets Weigh on ‘Aussie’
The Euro Australian Dollar (EUR/AUD) exchange rate edged higher by 0.3% today, with the pairing currently trading around AU$1.849.
The ‘Aussie’ slipped after Australian Prime Minister Scott Morrison announced that non-essential services would be shut down to prevent the spread of the coronavirus.
With tens of thousands of Australian jobs at risk, the Australian PM warned that the nation could face an economic crisis ‘the likes of which we have not seen since the Great Depression’.
Consequently, Australian Dollar (AUD) traders are jittery as the economy continues to slide towards a recession.
The Australian Dollar (AUD) is also suffering from compromised risk-appetite, with investors seeking out safe-haven currencies like the US Dollar and Japanese Yen instead.
The Organisation for Economic Co-operation and Development (OECD) has also warned that the global economy could see an economic crisis greater than that seen in 2008.
OECD secretary general Angel Gurría, commented:
‘Even if you don’t get a worldwide recession, you’re going to get either no growth or negative growth in many of the economies of the world… [I]t’s going to take longer to pick up in the in the future.’
Investors will continue to shun the risk-sensitive Australian Dollar (AUD) as coronavirus developments unfold.
Euro (EUR) Edges Higher as German Government Ramps Up Stimulus Measures
The Euro (EUR) edged higher despite growing fears that the Eurozone’s economy could he heading for a recession. This follows the European Union’s (EU) closure of the Euro-areas borders to prevent the spread of Covid-19.
The EUR/AUD exchange rate has benefited from news that the German Government is preparing to set up a €600bn stabilisation fund designed to help businesses and companies through the global Covid-19 crisis. €100bn will also be used to buy shares in businesses to prevent them from collapsing.
German Economy Minister Peter Altmaier said that the Government did the correct thing to ‘deploy the bazooka’, adding:
‘To everyone in hedge funds or elsewhere who is already looking forward to buying one or the other cheaply, make no mistake about it: We are determined to assist our companies in this situation.’
Euro (EUR) investors reacted positively to Germany’s measures to boost its economy. However, with the outlook for the bloc still uncertain, the single currency continues to remain compromised.
EUR/AUD Forecast: Eurozone Recession Fears to Weigh on Euro
EUR traders will be awaiting tomorrow’s release of Germany’s flash Markit Manufacturing PMI for March. However, with Germany’s largest sector expected to sink deeper into contraction territory we will likely see the EUR/AUD exchange rate begin to shed some of its gains.
The Eurozone’s composite PMI is also forecast to slump from 51.6 to 37.8.
With the Eurozone’s economy under increasing pressure the Euro is set to struggle throughout this week.
However, the risk-sensitive ‘Aussie’ will also remain compromised by growing concerns over the global economy. As a result, we could see both currencies sink in the near-term as the world’s economy struggles to grapple with the Covid-19 pandemic.