- EUR AUD Stable after Drop Yesterday – Australian Dollar gained as risk appetite rose.
- Iron Ore Prices Soar – AUD Rates Strengthen as key export price rises.
- EUR AUD Forecast – Markets to only see minor changes as they await election result.
The EUR AUD exchange rate is flat this morning after dropping around two cents on Monday with investors reluctant to take action ahead of the result of the US Election.
Euro Australian Dollar (EUR AUD) Unable to Advance Under US Election Pressure
The Euro Australian Dollar (EUR AUD) exchange rate remains under pressure this morning after tumbling yesterday following a surge in investor confidence that Democratic candidate Hillary Clinton will be victorious in the US presidential election. As Michael Hewson of CMC Markets said;
‘With the finishing line now in sight, financial markets are reacting as if a Clinton win is a done deal, in eerie echoes of the lead-up to the June UK Brexit vote, as markets priced in the preservation of some form of status quo, and we all know how that ended.’
While Clinton currently enjoys a four point lead in the polls, investors will not be ready to completely rule out her Republican rival Donald Trump just yet with the result having such a huge impact.
As Connor Campbell of SpreadEx suggests;
‘The morning session could be a bit of a duff one this Tuesday, given that nothing concrete from the US in terms state-voting etc is going to be out until this evening. It is likely going to be one of those days where the seismic nature of an event renders the market inert for around 24 hours.’
With such a divisive election it is hard to call what the outcome will be, but it’s certain to have a major impact not just on EUR AUD but the rest of the world’s currencies as well.
Australian Dollar (AUD) Enjoys Bump as Iron Ore Prices Skyrocket
The Australian Dollar remains poised to enjoy a significant rise in the event of a Clinton victory as soaring iron ore prices are likely to cause investors to flock to the commodity-correlated ‘Aussie’ if the markets remain stable.
Iron ore rocketed up 3.74% yesterday to $67.43 a tonne as the key Australian export continues to defy expectations. This is largely thanks to diminished production levels and rising demand in China as the Chinese economy begins to see signs of growth once again. However analysts warn that prices are likely to drop as 2017 approaches and production begins to ramp up to meet demand.
EUR AUD Exchange Rate Forecast: US Election Likely to Weigh on Pairing
The EUR AUD exchange rate will likely remain paralysed for the rest of today’s session as traders become increasingly dovish while they await the result of the US election.
A win for Clinton is likely to cause the Euro to slide further as she is perceived as having a stabilising effect on the US economy which would cause investors to go ‘risk-on’. Conversely a win for Trump is likely to increase market volatility as he is seen as an economic wildcard, causing the Australian Dollar to recede as investors become risk adverse in the ensuing chaos.
Meanwhile markets are likely to largely ignore mixed Eurozone data today, which showed German industrial production plummeted from 3.0% to -1.8% in September, while the German trade balance beat expectations as it rose from 19.9billion to 24.4billion over the same period.
Current Interbank Exchange Rates
At the time of writing the EUR/AUD exchange rate was trending around 1.43 and the AUD/EUR exchange rate was trending around 0.69.