Euro Australian Dollar (EUR/AUD) Exchange Rate Jumps as Eurozone Production Begins V-Shaped Recovery
The Euro Australian Dollar (EUR/AUD) exchange rate rallied by around 0.4% on Wednesday. This left the pairing trading at around AU$1.6494.
The Euro made gains this morning following the release of the latest industrial production from the Eurozone.
The latest data showed the mechanical recovery after strict lockdowns continued and did not lose speed.
Production jumped by 9.1% in June following May’s increase of 12.3%, showing the pace of recovery has only fallen slightly.
However, production in the bloc remained -11.6% below February’s levels. This suggests that there is a long way to go, although the start of the recovery is v-shaped.
Commenting on the bloc’s latest data, ING’s Senior Economist for the Eurozone, Bert Colijn wrote:
‘We now have to ask at what point will the mechanical recovery level off, giving a better idea of the lasting damage of the coronavirus crisis.
‘Even though it is unlikely that the V will be completed soon, recent survey data has been encouraging. Manufacturing businesses indicate that output has continued to recover in July and that new orders have also been returning quickly. Some pent-up demand will likely continue to cause industrial production to trend higher in the coming months, but due to all the downside risks to the manufacturing outlook, concerns about a sustained quick recovery of production remain justified.’
Australian Dollar (AUD) Slumps as Australia Records Deadliest Day
The ‘Aussie’ suffered losses against the single currency today after Australia recorded it deadliest data of the coronavirus crisis.
The country also saw the largest daily rise in infections in three days which dented hopes the second wave of the virus was stabilising.
Victoria reported 21 deaths, which was two more than the previous deadliest day recorded earlier this week. 410 new cases were also reported over the last 24 hours, which ended a three-day run of new infections being below 400.
However, only Victoria and New South Wales reported new cases today, and the virus has been effectively eliminated outside these areas.
NSW Premier Gladys Berejiklian said there could be additional restrictions put in place. Berejiklian also noted at a media briefing:
‘We’ve given certainly a grace period for businesses, for organisations, for different establishments to step up their COVID safe plans and if they don’t do that we will have to go a step further.’
Euro Australian Dollar Outlook: Aussie Unemployment in Focus
Looking ahead to Thursday, the Australian Dollar (AUD) could extend today’s losses following the release of the latest unemployment data.
If Aussie unemployment jumps higher than expected in July it will weigh on AUD sentiment.
Meanwhile, the pairing could be left flat following a slew of disappointing Eurozone data.
If France’s unemployment rate increases higher than forecast, it will weigh on EUR. Weak German inflation could also send the currency lower and leave the Euro Australian Dollar (EUR/AUD) exchange rate muted.