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EUR AUD Exchange Rate Tumbles as Eurozone PMIs Slow in October

The Euro Australian Dollar (EUR AUD) exchange rate slipped this morning as the latest Eurozone PMI revealed a slight slowdown in economic activity last month.

Euro (EUR) Tumbles as Economic Activity Slows

The Euro has fallen back at the start of the European session this morning as figures showed a marginal dip in Eurozone economic growth last month.

According to the final PMI releases published by IHS Markit this morning the Eurozone’s composite PMI tumbled from 56.7 to 56 in October, just ahead of the flash estimate last month that predicted the index would slow to 59.9.

The decline appeared to be largely driven by an easing in output growth in the manufacturing sectors of four of the five largest Eurozone economies.

However despite the slight slowdown analysts remain largely unconcerned as they suggest that with sectors continuing to expand at a robust pace that the Eurozone economy is on track for another solid quarter of growth.

Chris Williamson, Chief Business Economist at IHS Markit said;

‘The Eurozone growth spurt retained strong momentum at the start of the fourth quarter. The October headline PMI reading matched the average seen in the third quarter and puts the region on course for another 0.6-0.7% expansion in the closing quarter of 2017.’

Australian Dollar (AUD) Advances on Christmas Spending Hopes

The Australian Dollar has been lifted in early trade today on suggestions that Australia’s retail sales may rebound at the end of the year after an abysmal third quarter.

The suggestion comes on the back of a jump in ANZ’s domestic Job Advertisement figures last night which showed that job adverts increased by an impressive 1.4% in October after previously declining by 0.7%.

A notable jump in retail positions is particularly telling for Australia’s future sales growth however as it appears to show that retailers are gearing up for a substantial bump in trade over the Christmas period this year, suggesting that sales will likely recover in the forth quarter.

Callam Pickering, APAC Economist at jobs site Indeed said;

‘Leading into Christmas, Indeed is seeing strong demand for retail positions, with Christmas job postings tracking almost 20% higher than last year. Despite subdued retail spending, it appears that retailers are gearing up for a big Christmas spend.’

With retail sales accounting for roughly a third of the country’s economic growth a sharp rebound over the Christmas period would certainly be very welcome for the currency.

EUR AUD Forecast: RBA to Turn Dovish?

Looking ahead the EUR AUD exchange rate may rally overnight on Monday as the Reserve Bank of Australia (RBA) makes its latest rate decision.

While analyst do not expect the bank to make any alterations its current monetary policy in its November meeting, some suggest that the recent downturn in retail sales could cause it to adjust its outlook for future rate decisions.

Meanwhile the Euro may advance tomorrow with the release of the Eurozone’s own retail sales figures, with economists forecast that sales growth will have rallied from -0.5% to 0.6% in September.

Current Interbank Exchange Rates

At the time of writing the EUR AUD exchange rate was trending around 1.4783 and the AUD EUR exchange rate was trending around 0.6617.