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Euro to Australian Dollar (EUR/AUD) Exchange Rate Rises ahead of US-EU Trade Talks

Uncertainty about US-EU Meeting Fails to Damage EUR/AUD Exchange Rate

The Euro (EUR) has made a minor advance against the Australian Dollar (AUD) today, ahead of a key meeting about the US-EU trading relationship.

This rise has put the EUR/AUD exchange rate at AU$1.5767, which is an average level of trading for the week so far.

Euro traders are tense, before a key meeting between US President Donald Trump and European Commission President Jean-Claude Juncker.

Expectations for a workable compromise on US-EU trade are currently low, but this doesn’t mean that the meeting will be entirely fruitless.

Consider the needs of both parties, Accendo Markets’ Mike van Dulken said:

‘[Mr] Trump is looking for concessions on EU exports to the US (especially cars). [Mr] Juncker wants a full suspension of US tariffs before any deal can be agreed.’

The meeting comes after contrasting tweets by President Trump, one which called tariffs ‘the greatest’ and another which called for all US-EU tariffs to be dropped.

German Business Uncertainty Limits EUR/AUD Exchange Rate Gains

While there is cautious optimism about today’s US-EU meeting, the latest Eurozone data has limited EUR/USD exchange rate gains due to its mixed message.

This has been a collection of Ifo surveys for German economic confidence, covering July.

Business optimism has dipped, while future expectations have also declined. On the plus side, perceptions of current conditions have unexpectedly risen.

Summing up the mixed picture shown by this data, Ifo President Clemens Fuest said:

‘The German economy continues to expand, but at a slower pace.’

Australian Dollar to Euro (AUD/EUR) Exchange Rate Drops on Inflation Rate Upset

The Australian Dollar (AUD) has lost ground to the Euro (EUR) and most other currency peers today, following the release of AU inflation rate data.

Although the Q2 readings have shown an acceleration in annual price growth, the year-on-year rise from 1.9% to 2.1% has missed the expected 2.2% printing.

This minor difference has had a major impact on AUD traders, raising concerns that a Reserve Bank of Australia (RBA) interest rate hike is now further off.

Responding with extreme caution after the news, AMP Chief Economist Shane Oliver said:

‘We remain of the view that the RBA won’t raise interest rates until 2020 at the earliest and given the weakness in inflation, wages and … housing markets … the next move being a rate cut cannot be ruled out.’

Euro to Australian Dollar Exchange Rate Forecast: Will ECB Meeting Bring Greater EUR/AUD Gains?

Looking ahead, the Euro (EUR) could rise further against the Australian Dollar (AUD) on Thursday afternoon’s European Central Bank (ECB) policy meeting.

ECB officials will be meeting to discuss any adjustment to interest rates, although as usual no change from 0% is forecast.

More important will be any signs that the predicted ECB interest rate hike in 2019 could be coming sooner than expected.

Eurozone inflation was reported above the ECB’s target in June this year, so a Euro-boosting hint of an earlier rate hike tomorrow is a possibility.