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EUR AUD Exchange Rate Tight after Eurozone Manufacturing Slows

After opening daily trading in high demand, the Euro has since shed its gains against the Australian Dollar and fallen in value. This comes after a key measure of Eurozone activity posted worse than expected.

  • EUR AUD rate trades at 1.4772 – AUD EUR rate averages 0.6768
  • German unemployment drops – Euro unsettled by manufacturing disappointment
  • Australian Dollar unsettled by RBA interest rate freeze – ‘Slow and steady’ forecast from RBA Governor
  • Major Eurozone GDP estimate incoming – Australian trade stats out Thursday

The Euro has ticked down against the Australian Dollar today, making a minor loss to trade at an exchange rate of 1.4762.

Euro Slips after Manufacturing PMI Misses Estimates

The main Euro-damaging news today has consisted of a manufacturing PMI measure for July. The finalised Eurozone manufacturing measure has shown a slowdown in activity, from 57.4 points to 56.6.

Commenting on this lower-than-expected result was Markit Chief Business Economist Chris Williamson;

‘Eurozone factories were buzzing with activity again in July. The PMI came in slightly below the earlier flash estimate, slipping to a four-month low, but this is still an encouragingly buoyant reading. The survey indicates that manufacturing output was growing at an annual rate of approximately 4% at the start of the third quarter, sustaining the best growth spell that the region has seen for six years.

Despite the near-record rise in employment, companies continued to struggle to meet order book growth, with capacity constraints both at factories and their suppliers becoming increasingly widespread in recent months. While price pressures eased in July, inflationary pressures could pick up again if demand continues to outstrip supply’.

Slightly before the manufacturing stats came out, a -9k drop in the number of unemployed persons in Germany was recorded. This was more than forecast, but the following manufacturing stats largely erased any positive impacts from the news.

Australian Dollar Trades Tightly on Neutral RBA Outlook

After another ‘business as usual’ interest rate decision from the Reserve Bank of Australia (RBA), the Australian Dollar has been close against the Euro.

Officials left interest rates at 1.5% for the eleventh month in a row, while RBA Governor Philip Lowe followed the decision by saying;

‘Over the next couple of years, the central forecast is for the economy to grow at an annual rate of around 3%. Business conditions have improved and capacity utilisation has increased’.

Euro to Australian Dollar Advance Possible if GDP Ticks Up

The Euro may extend its current gains against the Australian Dollar in the near-term, when Eurozone-wide GDP figures are released.

Consisting of estimates for second quarter growth, these stats are predicted to show a rise to 2.1% from 1.9% on the year. No quarterly change from 0.6% is anticipated, but an annual rise could still push the Euro up higher.

After the latest downtrend triggered by the RBA news, the Australian Dollar could see further losses on the coming Thursday.

Traders have been gearing up for Thursday’s June trade balance announcement, which is projected to show a surplus reduction.

The country has posted a surplus since November 2016, so an above-forecast dip close to a deficit figure could worsen the current AUD weakness.

Current Interbank EUR AUD Exchange Rates

At the time of writing, the Euro to Australian Dollar (EUR AUD) exchange rate was trading at 1.4772 and the Australian Dollar to Euro (AUD EUR) exchange rate was trading at 0.6768.