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Euro Australian Dollar (EUR/AUD) Exchange Rate Muted despite Eurozone Inflation Rising as Forecast

Euro Australian Dollar (EUR/AUD) Exchange Rate Flat as Eurozone Inflation Fails to Meet ECB’s 2% Target

This morning the Euro Australian Dollar (EUR/AUD) exchange rate remained flat, with the pairing currently trading at an inter-bank exchange rate of AU$1.5996.

Economic data for the Eurozone showed that the Consumer Price Index rose as expected in February, although it failed to hit the European Central Bank’s (ECB) 2% target.

Monthly inflation rose by 0.3% and annual inflation rose to 1.5%.

Chief Eurozone Economist at Pantheon Macroeconomics, Claus Vistesen called this ‘the calm before the dreaded Easter volatility’, and noted:

‘Base effects in oil prices suggest that energy inflation will increase a bit further this month, before easing through the summer. Inflation in food, alcohol and tobacco in France are eliminated.

‘The core rate was held back by a 0.2% in services inflation, to 1.4%, while inflation in non-energy goods edged higher to 0.4%, from 0.3% in January. Leading indicators suggest that the trend in core inflation should be rising, but the next few months will be tainted by the dreaded Easter effect. The core rate likely will be severely depressed in March, before a big rebound in April.’

Australian Dollar (AUD) Slips as Trump-Xi Summit Pushed Back

The Australian Dollar (AUD) was likely provided with an upswing of support following statements from US President Donald Trump.

Trump said that the US would likely know in the next three or four weeks about a potential trade deal with China.

During a St. Patrick’s Day Reception from the White House’s East Room the President said:

‘We’ll have news on China. Probably one way or the other, we’re going to know over the next three to four weeks.’

This likely offset some of the disappointment from earlier in the day when Bloomberg reported that a near-term trade deal between the US and China was extremely unlikely.

Commenting on this, Ray Attrill, Head of FX Strategy at the National Australia Bank said:

‘Reports that a Trump-Xi meeting might not take place at least until late April, but which could be expanded to a full state visit rather than just a photo-op to sign a trade deal, were greeted with some disappointment.

‘Since then, US Treasury Secretary, Steve Mnuchin has been out on CNBC confirming that there will be no Trump-Xi meeting this month at least but that he is pleased with progress on trade talks.’

Euro Australian Dollar Outlook: Will the EUR/AUD Exchange Rate Slide if German Economic Sentiment Disappoints?

Looking ahead to next week, it seems like the Australian Dollar (AUD) could slip against the Euro (EUR) following the release of the Reserve Bank of Australia (RBA) meeting minutes.

If the RBA’s minutes are considerably dovish, it could weigh on the ‘Aussie’ as there are growing concerns the central bank will cut interest rates this year.

However, the pairing could slide following the release of March’s German ZEW economic sentiment.

Economic sentiment is forecast to contract further, from -13.4 to -14, which could cause the Euro Australian Dollar (EUR/AUD) exchange rate to slide.