EUR/AUD Exchange Rate Climbs as Slide in CHY Punishes the ‘Aussie’
The Euro Australian Dollar (EUR/AUD) exchange rate punched higher this afternoon as ‘Aussie’ became an unwilling causality in the devaluing of the Chinese Yuan.
At the time of writing the EUR/AUD exchange rate its up 0.4% from this morning’s opening levels, with the pairing having appreciated over half a cent during the European session.
Australian Dollar (AUD) Exchange Rate Slumps as Chinese Yuan (CHY) Sell-Off Continues
The Australian Dollar (AUD) is plummeting against the Euro (EUR) and most other major currencies today as it continues to face pressure from the current downswing in the Chinese Yuan (CHY).
China is a major trade partner for Australia, so the devaluing of its currency is likely to make Australian exports more expensive for Chinese importers, potentially resulting in a slowing of trade.
Given a large portion of Australia’s growth comes from its exports, this has a negative impact on the Australian Dollar.
On top of this the downturn in the Yuan in currently dragging on market risk sentiment, further diminishing the appeal of the risk sensitive ‘Aussie’.
Edwin Gutierrez, head of emerging-market sovereign debt at Aberdeen Standard Investments said:
‘The yuan’s definitely weighing on risk, although much more so on Asia.’
Euro (EUR) Exchange Rate Slowed by Weak Consumer Sentiment
Meanwhile the Euro (EUR) gains this afternoon have been trimmed somewhat by the release of the Eurozone’s latest consumer confidence reading.
According to a flash estimate published by the European Commission, the Eurozone’s consumer sentiment index held at -0.6% in July, its lowest levels since last October.
While this was slightly stronger than expected, it still indicated consumers in the Eurozone are becoming increasingly pessimistic, trimming some of the Euro’s gains at the start of the week.
EUR/AUD Exchange Rate Forecast: Will Dip in Eurozone PMI Figures Weaken the Euro?
Looking ahead, all eyes will be on the Eurozone tomorrow as it publishes its latest PMI estimate, with movement in the Euro Australian Dollar (EUR/AUD) exchange rate set to be dominated by the release.
Markets are bracing for a possible fall in the Euro following the figures as economists the data will reveal following a brief uptick in June, activity in the Eurozone’s private sector will have continued to slow in July.
Meanwhile the Australian Dollar is poised to surge overnight on Tuesday as Australia publishes its latest Consumer Price Index (CPI), with analysts predicting domestic inflation will have surged from 1.9% to 2.2% in the second quarter.