Euro to Australian Dollar Exchange Rate Sees Narrow Fluctuations amid Myriad Uncertainties
Both economic and geopolitical fears have been weighing on the Euro (EUR) and Australian Dollar (AUD) this week, and as a result the Euro to Australian Dollar (EUR/AUD) exchange rate has seen mixed, narrow movement.
As German recession fears flared up last week, EUR/AUD tumbled back from near its best levels all year, sliding from the level of 1.6500 to 1.6363.
This week so far, EUR/AUD has been fluctuating within a tight region between lows of 1.6314 and highs of 1.6406. At the time of writing today, EUR/AUD wasn’t trending too far from the week’s opening levels.
Euro (EUR) Exchange Rates Pressured by Recession Speculation and Italian Political Uncertainties
The Euro outlook has seen deeper and deeper uncertainties in recent weeks.
Poor German and Eurozone ecostats have been worsening concerns that Germany could fall into recession in the coming quarters. This caused much of last week’s Euro weakness, but these concerns persist this week as well.
Part of this week’s Euro weakness has been Italy’s deepening political crisis however.
Italian Prime Minister Giuseppe Conte stepped down as leader yesterday, as the ruling coalition government broke down.
With Italy’s government in limbo, rivals to the far-right populist League Party are looking at options to form a different coalition government.
Australian Dollar (AUD) Exchange Rates Struggle to Gain amid Trade Uncertainty
Yesterday’s Reserve Bank of Australia (RBA) meeting minutes report offered the Australian Dollar a little support, as investors pared back bets of any monetary policy action being taken in September.
The RBA has notably been less dovish than many other major central banks, indicating that it is unsure of the impact of further interest rate cuts.
The bank is still expected to cut Australian interest rates again at some point before the end of the year however.
Still, the Australian Dollar has been unable to capitalise on the RBA news, as global trade uncertainties continue to weigh heavily on the outlook for the trade-correlated currency.
US-China trade war fears have been rising this month. As China is Australia’s biggest trade partner, the Australian Dollar remains under notable pressure.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Investors Await PMI Projections
While the Euro to Australian Dollar (EUR/AUD) exchange rate has seen relatively narrow movement this week so far, the pair could still see notable shifts in movement towards the end of the week in reaction to upcoming data and possible central bank news.
Thursday will see the publication of most of this week’s most notable Australian and Eurozone ecostats.
Australia’s August PMI projections from CommBank will be published during the Asian session and will give investors a better idea of how Australia’s economy is performing this month.
The Eurozone’s August PMI projections will be similar, and Germany’s manufacturing data will be particularly influential. If German manufacturing sees an even deeper contraction as expected, German recession fears will likely worsen.
Towards the end of the week, Euro to Australian Dollar (EUR/AUD) exchange rate investors will also be closely watching the Central Bank Symposium at Jackson Hole for news that could influence Reserve Bank of Australia (RBA) or European Central Bank (ECB) bets.