Euro Australian Dollar (EUR/AUD) Exchange Rate Edges Higher After ‘Black Monday’
The Euro Australian Dollar (EUR/AUD) exchange rate edged higher, leaving the pairing trading at around AU$1.7353.
The single currency was able to make gains against the ‘Aussie’ as markets stabilised causing oil prices to rise by 10% after ‘Black Monday’.
The possibility of further economic stimulus from major central banks offset worries about the growing number of coronavirus cases in Italy.
The number of cases in Italy passed 9,000 while the death toll reached 463 causing the government to extend its emergency lockdown nationwide.
While the Euro benefitted, analysts have argued today’s rise does not mean the current crisis is over and this likely weighed on the risk-sensitive AUD.
Commenting on this, Societe Generale’s Kit Juckes stated:
‘The expression ‘dead cat bounce’ was invented for mornings like this.’
Meanwhile, this morning’s growth data from the Eurozone showed the bloc grew at a snail’s pace during the final three months of 2019.
Australian Business Confidence Slumps Near Seven-Year Low
The Australian Dollar remained under pressure today after data revealed that business confidence continued to decline.
National Australia Bank’s (NAB) measure of business confidence slumped to -4 in February, the lowest level since July 2013.
During February’s survey NAB included a special question asking firms whether or not they had any impact from the outbreak of coronavirus. Around half of respondents said the outbreak had some effect.
According to NAB Group Chief Economist, Alan Oster:
‘It is very possible this number will rise as the spread of the virus continues – this would most likely result in a further deterioration in confidence and eventually reported business conditions.’
The outbreak of Covid-19 has wreaked havoc on Australia’s tourism and education sectors. The Treasury has predicted Q1 2020 growth will slump by around -0.5%.
Meanwhile, economists are predicting a recession, and expect growth will contract during the first half of this year.
Euro Australian Dollar Outlook: Aussie Consumer Confidence in Focus
Looking ahead, the Australian Dollar (AUD) could suffer losses against the Euro (EUR) after a speech from the Reserve Bank of Australia’s (RBA) Guy Debelle.
If Debelle discusses monetary policy and is overly dovish, and suggests the bank will need further easing to offset coronavirus damage, AUD will slide.
A slew of disappointing data could cause the ‘Aussie’ to slide further against the single currency.
If Westpac reveal that Aussie consumer confidence has slumped in March due to coronavirus fears, the Euro Australian Dollar (EUR/AUD) exchange rate will edge higher.
