Broad Concerns about US-China Clash Drag EUR/AUD Exchange Rate Down
The Euro has made a slight loss against the Australian Dollar today, as markets around the world take a cautious outlook on a potential erupting trade war.
The United States and China are the main actors in this conflict, which threatens to see the US impose harsh controls on the import of goods.
Problematically, the US is running a ‘Made in America’ policy while China is operating a ‘Made in China’ ethos.
Both of these competing ideologies could have negative side-effects for entities which trade with both nations, including countries in the Eurozone.
Australian Dollar to Euro Exchange Rate Rises after Trade Tariff Exemption
The Australian Dollar has advanced against the Euro today, following the news that Australia has acquired at least temporary exemption against US metal tariffs.
It was widely expected that the two nations would reach an agreement on the matter, but today’s declaration has sealed the deal.
Notably, Australia could still find itself slapped with quotas or smaller tariffs by 1st May, because of continued negotiations on the subject.
Although the Australian Dollar has advanced on the news, it has been prevented from rallying because of concerns about US tariffs against China.
China is Australia’s largest trading partner and the worry is that if the US and China enter into a trading war, Australia will be caught in the crossfire.
This might mean lower demand for Australian goods from the US and China, as the US turns protectionist and China reconsiders trade relationships.
While the Eurozone has also acquired temporary exemption from the metal tariffs, the possibility of a full Australian exemption is considered more likely.
Euro to Australian Dollar Exchange Rate Forecast: Risk of EUR/AUD Losses from Falling Eurozone Confidence
The Euro to Australian Dollar exchange rate could fall in the coming week, when Eurozone economic optimism stats come out on 27th March.
Although the business confidence reading is tipped to show growth from 1.48 points to 1.77, in economic and industrial sentiment declines are forecast.
Any Euro losses caused by such data could be extended on 28th March, if German consumer confidence stats show another forecast-matching slowdown.
There is a chance of a late-week EUR/AUD exchange rate recovery on 29th March, if the German unemployment rate falls and inflation estimates rise.
Germany’s sizable economy is sometimes considered to represent the Eurozone as a whole, so positive data like this could boost support for the Euro.
There will be little direct Australian data next week, with the only notable source of influence being the ANZ Roy Morgan consumer confidence index on 26th March.
The weekly reading previously showed a decline from 119 points to 116; an additional reduction in the index could see the AUD/EUR exchange rate worsen.