The Euro has expanded its gains against the Australian Dollar today, rising from 0.3% to 0.4% on further US uncertainty.
As talk of an impeachment and the obstruction of justice takes root in Washington, news has come that all US Dollar gains since Trump took office have been reversed. This has further eroded US confidence, providing the Euro with ground to advance.
(First published 13:52, May 17th, 2017)
The Euro has risen by 0.3% to 1.4986 against the Australian Dollar today – the best exchange rate since September 2016.
- EUR AUD exchange rate rises to 1.4980 – AUD EUR rate dips to 0.6673
- Euro appreciates on inflation rise – Eurozone construction slows in March
- Australian Dollar damaged by falling confidence – Stats show scepticism about 2017 budget
- Euro rally possible on ECB accounts – Australian Dollar may slump on jobs stats
Euro gains today have been caused by positive inflation figures for April.
Although inflation results met forecasts instead of exceeding them, annual growth results still raised Euro demand.
Base yearly inflation rose to 1.9%, while core annual inflation also climbed to 1.2%. Monthly inflation dipped to 0.4%, though this was in line with expectations.
The European Central Bank (ECB) inflation target is 2%, so any movement towards this figure raises the odds of an ECB interest rate hike. Eurozone interest rates have rested at 0% since March 2016, so an eventual rate hike could trigger a Euro surge.
Australian Dollar to Euro (AUD/EUR) exchange rate losses have been caused by the Westpac consumer confidence index for May. Alarmingly, confidence has fallen by -1.1%, which Westpac blames on last week’s federal budget reveal.
Westpac Chief Economist Bill Evans pinpointed the issues for economists;
‘[There was] a flat response to the budget, with respondents remaining concerned about their finances and no signs of any improvement in wages prospects. [This could increase] the risks of weak household spending feeding back onto employment, [while] investment will remain a concern for policymakers’.
The Euro may rise further against the Australian Dollar on Thursday, depending on the tone of ECB releases.
The central bank will release its minutes from the recent policy meeting, while three key officials will also be making speeches.
If the minutes and policymakers both show optimism about the Eurozone’s economic health, the Euro could advance further against the Australian Dollar.
On the other side, AUD movement could be caused by Thursday’s unemployment rate and employment change stats for April.
Unemployment is predicted to remain static at 5.9%, while a slight 5k rise is forecast for the number of employed persons.
If Australian unemployment drops unexpectedly, the Australian Dollar may briefly rise against the Euro.
Current Interbank EUR AUD Exchange Rates
At the time of writing, the Euro to Australian Dollar (EUR AUD) exchange rate was trading up at 1.4980 and the Australian Dollar to Euro (AUD EUR) exchange rate was trading down at 0.6673.