EUR/AUD Exchange Rate Rangebound as Euro Hopes Rise on Dovish US Economy
The Euro Australian Dollar (EUR/AUD) exchange rate steadied today and is currently trading around AU$1.617 on the interbank market.
The Euro (EUR) is rangebound against the Australian Dollar (AUD) today as European currency traders await testimony by the US Federal Reserve Chairman Jerome Powell.
With few Eurozone data releases today and the Euro negatively-correlated to the US Dollar, any dovish comments from Mr Powell could provide a boost the single currency.
However, as hopes are running high that the US central bank could push forward with a gloomy monetary policy, Euro traders are remaining poised.
The Australian Dollar, meanwhile, struggled against many of its competitors today following the release of the Australian Westpac consumer confidence figures for July.
These fell from -0.6% to -4.1% – their worst in 2 years.
Matthew Hassan, a Senior Economist at Westpac, said:
‘The fall in sentiment this month is troubling as it comes against what should have been a supportive backdrop for confidence. The main driver continues to be deepening concerns about the outlook for the Australian economy and prospects for family finances.’
AUD/EUR Exchange Rate Flat as Chinese Inflation Holds
As the Australian Dollar is closely correlated to Chinese economic health – with China being Australia’s closest trading partner – the publication of the Chinese inflation figures for June, which held steady at 2.7%, has provided some stability for the ‘Aussie’.
However, as annual Chinese Producer Price Index (PPI) figures for June fell below consensus to 0.0%, this has caused some concern for ‘Aussie’ traders.
Julius Evans-Pritchard, a Senior China Economist at Capital Economics, said:
‘The bigger picture is inflation, apart from food inflation, is actually pretty weak and with the economy continuing to cool, I think the return to factory-gate deflation is very likely.’
The Australian economy, however, is remaining in focus as Josh Frydenberg, Australia’s Treasurer, has shown an increasingly dovish stance on the economy.
Mr Frydenberg said:
‘The Reserve Bank governor has already said we need the government to do more fiscal stimulus. Retail is diabolical right now, as house prices go down and people have stopped spending.’
EUR/AUD Forecast: Euro Could Rise on Bullish Eurozone Monetary Policy Meeting Report
Australian Dollar traders will be looking ahead to tomorrow’s inflation figures for July.
Any signs of an increase could provide some uplift for the single currency.
Tomorrow will also see the release of the Australian home loans figures for May, which, however, are not expected to improve.
Euro investors, meanwhile, will be awaiting tomorrow’s year-on-year German Harmonized Index of Consumer Prices figures for June.
These are expected to hold at 1.3%.
The EUR/AUD exchange rate could, however, show some signs of improving if the European Central Bank’s monetary policy meeting accounts report indicates any bullish turns for the Eurozone’s economy.