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Euro Australian Dollar (EUR/AUD) Exchange Rate Slips despite Hints of Italy Budget Concession

EUR/AUD Exchange Rate Falls despite Italy’s Hint at Budget Compromise

The Euro Australian Dollar (EUR/AUD) exchange rate has gone down today, and is currently trading at AU$1.5635, after Italy hinted at a concession over its controversial budget lifts risk appetite.

Italy’s budget is a primary concern within the Eurozone, with single currency investors increasingly concerned over the EU’s possible disciplinary actions against its third-largest national economy.

This follows EUR strengthening against AUD yesterday, with the UK Prime Minister Theresa May’s Brexit agreement receiving a rubberstamping from the EU.

At the same time the Australian Dollar (AUD), suffered following a sharp drop in iron ore prices on Monday.

Euro Australian Dollar (EUR/AUD) Exchange Rate Gains Ground as Italy Softens on Budget Stance

The Euro Australian Dollar (EUR/AUD) exchange lost ground today even as Italy showed hints of compromising on its controversial budget.

Italy’s Deputy Prime Minister, Luigi Di Maio, seemed to say that he might be willing to compromise on the higher-than-permitted deficit, saying:

‘What is important is that the budget contains the goals that we have established. Then if the negotiation means that the deficit [target] must come down a bit, for us it’s not important.’

The Euro briefly found strength in Italy’s willingness to bargain with the EU, however Cyril Regnant, a bond strategist for the investment bank Natixis, said that the market was ‘overreacting’ adding:

‘As of today, we don’t have any real backing or figures [to the reports of lowering the budget deficit target.’

Today also sees the European Court of Justice (ECJ) consider the case for a unilateral exit reversal under Article 50 of the Lisbon Treaty, which if deemed possible could enable the Brexit decision to be turned around.

Australian Dollar Euro (AUD/EUR) Exchange Rises despite Increased US-China Trade Tensions

The Australian Dollar (AUD/EUR) exchange ticked higher today as news from the US that President Donald Trump was thinking about increasing tariffs on Chinese imports exacerbated trade tensions ahead of Friday’s G20 meeting.

The relatively high-yielding ‘Aussie’ is sensitive to any developments in US-China trade tensions developing before G20, and as Trump told the Wall Street Journal that he expected to raise tariffs on $200 billion in Chinese imports – an increase of 25% on the current 10% – tensions look to continue ahead of G20 in Buenos Aires, Argentina, this Friday.

Italy’s Budget Uncertainty Returns while Brexit Faces its Final Hurdle

EUR/AUD exchange rate will be increasingly sensitive to any uncertainty regarding both the UK’s Brexit deal and Italy’s budget stubbornness threatening EU disciplinary action again.

The Australian Dollar (AUD) will be sensitive to any comments from Donald Trump or China’s President Xi Jinping, ahead of the G20 summit, with any hint of hostilities dampening demand for the risk-averse ‘Aussie’.

EUR may gain strength from the Friday release of Germany’s retail sales, with expectations of a 0.2% October increase against September’s 0.1% likely to help sentiment in the single currency.

Overall, the AUD/EUR exchange rate will likely be sensitive to political developments rather than economic ones this week.