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Euro to Australian Dollar Exchange Rate Tight on Macron Fears

The Euro has shed its earlier gains against the Australian Dollar, to the point of trading tightly.

This slide in EUR trader confidence comes alongside Australian budget analysis. While the high-profile tax on banks has been touted by the government, economists remain sceptical that it will not pass any costs onto customers.

(First published 12:06, May 9th, 2017)

The Euro (EUR) has risen by 0.4% against the Australian Dollar (AUD) today due to AUD weakness.

  • EUR AUD rate rises to 1.48 – AUD EUR trades down at 0.67
  • Euro struggles on Macron uncertainty – EUR AUD remains near 8-month high
  • Australian Dollar dips as budget is unveiled – Plans focus on taxing banks and foreign employment
  • French trade balance and Draghi speech incoming – AU budget analysis could weaken AUD

At 1.49, the EUR AUD exchange rate is currently trading at its best level since September 2016.

Despite this, Emmanuel Macron’s French Presidential election win has continued to drag on the Euro. The issue has been the June parliamentary elections; if he fails to gain the support of MPs, then Macron could struggle to implement his ambitious economic reforms.

Eurozone economic data has been polarising, with disappointing Italian retail sales countering a positive German trade surplus expansion.

The big Australian news today has been the revelation of the 2017-18 federal budget.

The budget is considered ambitious, with plans including an AU$6.2bn tax on the nation’s biggest banks. In a bid to encourage domestic training, employers will also be charged if they use overseas workers to fill vacancies.

One budget gamble has been a plan to stop developers selling over 50% of new construction projects to overseas investors. This could rapidly drive down costs on the housing market, but may also cause new home funding to dry up.

On spending, the government plans to splash AU$5.3bn on a second Sydney airport and grant schools around AU$18.6bn in funding over the next decade.

Upcoming Eurozone data will consist of Wednesday’s French trade balance, along with French and Italian industrial production figures.

A slight French trade deficit reduction is forecast, while growth is forecast for monthly French and annual Italian industrial results.

Ending Wednesday’s news will be a speech from European Central Bank (ECB) President Mario Draghi. If Draghi is positive about Macron’s fledgling presidency then the EUR AUD exchange rate could rise.

These are early days, but if the Australian budget is given a positive score by analysts, the AUD EUR exchange rate could rally.

Apart from budget analysis, the Australian Dollar could move in reaction to next Friday’s May consumer inflation expectations.

Current Interbank EUR AUD Exchange Rates

At the time of writing, the Euro to Australian Dollar (EUR AUD) exchange rate was trading up at 1.48 and the Australian Dollar to Euro (AUD EUR) exchange rate was trading down at 0.67.