The Euro (EUR) has continued to trade in a narrow range against the Australian Dollar (AUD) today, following the release of German inflation data.
Preliminary estimates for June have shown a slowdown on the annual and quarterly readings, but this hasn’t led to EUR/AUD exchange rate losses.
Currency traders are paying more attention to the fact that annual inflation remains above the European Central Bank’s (ECB) 2% target at 2.1%.
Reacting positively to the news, VP Bank Group’s Thomas Gitzel said:
‘Regardless of how inflation develops, the path of the ECB has been marked.’
(Last updated 28th June, 2018)
Mixture of Eurozone Confidence Readings Leave EUR/AUD Exchange Rate Tight
The Euro (EUR) has held close to opening levels against the Australian Dollar (AUD) today, ahead of a meeting of EU leaders.
This has made one Euro worth AU$1.5756, which is an average level for weekly pairing trading.
This morning’s Eurozone news has missed and exceeded expectations, leaving EUR traders unsure of how to proceed.
Levels of business confidence in June fell by more than forecast, but services sentiment grew during the same month.
An economic sentiment measurement has dipped from 112.5 points to 112.3, but this has still beaten the predicted 112 point printing.
Overall, the data has been better-than-expected as it hasn’t shown the outright drop in confidence scores that many had predicted.
There are still background concerns about how US trade tariffs might affect the EU in the future, but for now UBS analysts have said:
‘As long as the frictions are absent across emerging markets or between the Eurozone and its trading partners, the chances are high that the global recovery can continue.’
Australian Dollar to Euro Exchange Rate Steady after Digital Competition Warning
Today has been quiet when it comes to Australian economic data, which has left the Australian Dollar (AUD) trading tightly against the Euro (EUR).
The only notable AU news has been a warning from the Australian Computer Society (ACS) about competitiveness on the international level.
A recent report from the ACS has highlighted Australia’s middling technological performance, warning that competitiveness could drop in the coming years.
Commenting on the news, Deloitte’s Kathryn Matthews said:
‘Australia ranks 12th out of the 16 countries on business expenditure on research and development in ICT.
‘Couple this with falling behind in the supply of ICT skills in the current workforce and on STEM performance in schools [and] we cannot afford to be complacent.’
Euro to Australian Dollar Exchange Rate Forecast: Will Eurozone Inflation Slowdown Bring EUR/AUD Losses?
The Euro’s (EUR) limited movement against the Australian Dollar (AUD) today could give way to losses in the afternoon, when German inflation data comes out.
Preliminary figures for June are tipped to show slowing price growth for the annual and monthly readings, which could end up worsening Euro exchange rates.
Because of the size of its economy, slowing German inflation could directly lead to slowing Eurozone inflation, which would be bad news for Euro traders.
A slower pace of inflation risks a move away from the European Central Bank’s (ECB) 2% target, which reduces the likelihood of an eventual ECB interest rate hike.
Less concretely, the Euro to Australian Dollar exchange rate (EUR/AUD) could also be affected today by the first of two days of EU meetings.
Leaders from the 28 nations will be meeting to discuss pressing matters such as Brexit progress, migration and Eurozone reform.
The last of these topics could have the greatest effect on the Euro – if member nations seem united on reforming the Eurozone then the EUR could rise.
Closing off weekly news, there will be Eurozone-wide inflation estimates for June out on Friday morning.
As with today’s German stats, a year-on-year inflation rate slowdown is forecast; such a result risks a late-week EUR/AUD exchange rate slowdown.