- Euro weakness persists as week’s trading begins – EUR AUD down to 1.47
- Euro losses extend after German central bank statement – Bundesbank sees little negative impact from ECB policies
- Australian Dollar holds fast across trading – Further RBA stats due this week
The Euro has failed to make any real recovery against the Australian Dollar over trading today, due to both continued ‘Aussie’ strength and further negativity emerging from the Eurozone. In the latter case, Bundesbank has included in its monthly report a defence of recent European Central Bank (ECB) policy measures, which has been a controversial decision.
Australian Dollar gains have persisted across the session, thanks to no real damage occurring for the ‘Aussie’.
Looking ahead, this week will bring RBA meeting minutes for the month tomorrow, as well as a speech from RBA official Alexandra Heath on Wednesday. A major test for new Governor Lowe will be the answering of questions to parliament on Thursday, which is due to take place early on in the morning.
(Last updated September 19th, 2016)
Euro Exchange Rate Flops as German Anti-Immigrant Sentiment Grows ahead of 2017 Elections
The Euro has made a shaky start to trading this week, having fallen by -0.4% against the Australian Dollar (EUR AUD) and -0.7% against the New Zealand Dollar (EUR NZD), among other losses.
The only major Eurozone data so far has seen currency bloc’s current account for July fall from 39.1bn to 31.5bn, though political news out of Germany has also generated a significant amount of negative sentiment among Euro investors.
While 2016’s German state elections have seen major coalition members the Christian Democratic Union (CDU) hold onto their overall strength in the country, elections in the state of Mecklenburg-Vorpommern saw the CDU come third against fellow coalition party the Social Democrats (SPD) and anti-migration group Alternative for Germany (AfD).
This sets a concerning precedent for 2017’s German federal election, given that CDU head Angela Merkel’s policy of welcoming refugees into the country puts her at direct odds with the seemingly popular AfD, who represent the right wing of German politics.
Australian Dollar Appreciates Heavily as Philip Lowe Starts as RBA Governor
Australian Dollar exchange rates have been highly supportive today, thanks to an extremely positive investor reaction to the latest news from Australia’s central bank, the Reserve Bank of Australia (RBA).
Over the weekend, the RBA underwent a change of leadership, as Glenn Stevens ended his ten-year term and Philip Lowe stepped into the role.
Although the usual market response to new leadership is to react with uncertainty, the latest advances for the Australian Dollar imply a significant degree of confidence in the RBA’s new leader and how he could shape the central bank, with a former classmate of Lowe’s, Eurizon SLJ Capital Ltd head Stephen Jen stating;
‘These smaller but respectable central banks can be the innovators in policy; they can be more nimble and don’t have the burdens that larger-economy counterparts do’.
Gains for the ‘Aussie’ today include 0.3% against the Canadian Dollar (AUD CAD) and 0.5% against the Chinese Yuan (AUD CNY) and Euro (AUD EUR).
Future EUR AUD Forecast: Losses Possible Tomorrow on Eurozone Construction Stats
The next notable economic news to watch out for will come this evening, when European Central Bank (ECB) official Yves Mersch gives a speech.
From Australia, tomorrow morning will see the release of the RBA minutes for September, as well as the Australian house price index for Q2. On the quarter, a repeated drop of -0.2% is expected for the index.
With a new RBA Governor now in place, it is possible that the minutes covering former Governor Glenn Stevens’ tenure will be discounted, though if not, the usual pattern of hawkishness raising the Australian Dollar’s value and dovishness depleting it is expected to be followed.
Current EUR, AUD Exchange Rates
The Euro Australian Dollar (EUR AUD) exchange rate was trending in the region of 1.4804 and the Australian Dollar Euro (AUD EUR) exchange rate was trending in the region of 0.6757 today.