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Euro Australian Dollar (EUR/AUD) Exchange Rate Slides on Bundesbank Court Decision

Euro Australian Dollar (EUR/AUD) Exchange Rate Falls on ECB Bond-Buying Worries

The Euro Australian Dollar (EUR/AUD) exchange rate slumped by around -0.4% this afternoon, leaving the pairing trading at around AU$1.6802.

The single currency slumped against the ‘Aussie’ today after Tuesday’s court decision which challenged Germany’s participation in the Eurozone’s stimulus programme.

Germany’s highest court gave the European Central Bank (ECB) three months to justify purchases under its bond-buying programme. If they could not do this the bank would lose the Bundesbank’s participation.

This sent the single currency lower against a handful of its rivals including AUD, and the US Dollar. EUR/USD even slumped to a six-day low.

However, the ECB is largely expected to justify its purchases. This means the decision from Germany’s top court isn’t likely to derail the Eurozone’s stimulus programme.

AUD Gains as Australian Retail Sales Jump to Record High

Meanwhile, the ‘Aussie’ made gains after data showed panic buying as the coronavirus hit in March boosted retail sales.

Sales jumped to a record high due to panic buying of food and toilet rolls. Although, the majority of this surge came from an increase in prices rather than the volume of goods.

The Australian Bureau of Statistics noted food sales jumped by 24% – with the sales of soup increasing by 180% and flour soaring 140%. The sales of toilet rolls also jumped by 115%.

However, while this provided AUD with a slight boost, it is likely the boost in sales will be reversed. April’s sales figures are likely to have plummeted due to Australia’s strict social distancing rules and the closure of many businesses.

Added to this, the increase in sales weighed on GDP as the majority of the gain came from higher prices rather than higher volumes.

This meant sales adjusted for inflation edged up by just 0.7% in the first three months of 2020, despite analysts hoping for an increase of around 1.7%.

Euro Australian Dollar Outlook: Will a Disappointing Construction PMI Weigh on EUR?

Looking ahead, the Australian Dollar (AUD) could give up some of its gains against the Euro (EUR) following the release of services data.

If Ai Group’s Services Index plummets further than forecast in April, it could weigh on the ‘Aussie’.

However, Germany’s construction PMI could weigh on the single currency. If construction activity plummets to a fresh low, it could leave the Euro Australian Dollar (EUR/AUD) exchange rate lower.