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Cautious Forecasts about Italian Coalition Drag Euro to Australian Dollar (EUR/AUD) Exchange Rate Down

EUR/AUD Exchange Rate Drops as Italian Economic Plans Panic Traders

The Euro (EUR) has seen a moderate decline against the Australian Dollar (AUD) today, following the reveal of economic plans for Italy.

Talks to form a coalition government are currently at a critical stage, but there are concerns that policy plans could risk destabilising the Eurozone as a whole.

Among the measures suggested by the Five Star Movement and League parties are plans to ask for debt forgiveness of €250bn from the European Central Bank (ECB).

Another measure has been the proposal that a system could be created in which Eurozone members would be able to give up the Euro.

These suggestions aren’t as bad as the feared Italian exit from the EU, but traders are still rattled about a potentialy Eurosceptic Italian leadership.

Australian Dollar to Euro (AUD/EUR) Exchange Rate Rises despite Higher Unemployment Rate

Australia’s jobs market data has presented a mixed picture today, but this hasn’t prevented a small Australian Dollar to Euro (AUD/EUR) exchange rate rise.

The Australian Dollar (AUD) has advanced despite a seemingly disappointing adjustment to April’s unemployment rate from 5.5% to 5.6%.

The silver lining is that there were more people in employment during the month, in addition to more people finding full-time work.

The higher unemployment rate is instead being blamed on a change to the participation rate, which rose from 65.5% to 65.6%.

This minor increase has increased the number of persons who are actively seeking employment, which has bumped up the jobless rate.

As such, this is seen as a somewhat positive development as Australian Bureau of Statistics Chief Economist Bruce Hockman says:

‘The labour force participation rate was the highest it has been since the series began in 1978.’

Euro to Australian Dollar Exchange Rate Forecast: Will Growing Eurozone Trade Surplus Cause EUR/AUD Recovery?

The Euro’s (EUR) recent losses against the Australian Dollar (AUD) could be reversed in the near-term, when Eurozone trade balance stats are released on Friday.

These are predicted to show a sizable expansion of the existing trading surplus during March, from €18.9bn to €27.9bn.

A higher trade surplus means that Eurozone countries are exporting more goods than they are importing, which indicates a healthy trading relationship.

Next week, however, the EUR/AUD exchange rate could see struggle on Monday as Eurozone PMI readings are forecast to show falling activity in May.

Additional losses could be caused by a Eurozone consumer confidence flash for May, which is expected to show a drop in optimism from 0.4 points to -1.4.

The next Australian economic data is some way off and will consist of a measure of construction output in Q1 2018, released on Wednesday.

This is tipped to show an improvement compared to Q4 2017, with a shift from -19.4% to 9%. Such a result may lead to a mid-week AUD/EUR exchange rate rise.