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Euro to Australian Dollar Exchange Rate Slips from Highs as Eurozone Industrial Production Slows

Euro to Australian Dollar Exchange Rate Fluctuates on Mixed Currency Movements

Thanks to a combination of weak risk-sentiment and mixed Australian ecostats, the Euro to Australian Dollar (EUR/AUD) exchange rate has been able to hold above the week’s opening levels. However, underwhelming Eurozone data has caused EUR/AUD to fall from its highs.

Last week, risk-aversion and cooling political fears in the Eurozone made it easier for EUR/AUD to advance from 1.5405 to 1.5483. This week the pair’s movement has been comparatively tight.

EUR/AUD touched a high of 1.5531 on Wednesday morning, but following disappointing Eurozone ecostats the pair slipped and at the time of writing was trending closer to the level of 1.5500.

This week’s data from both the Eurozone and Australia have dampened the appeal of both the Euro (EUR) and the Australian Dollar (AUD), leaving currency movement limited.

Investors of both currencies also remain anxious about recent developments regarding US trade protectionism.

Euro (EUR) Exchange Rates Pressured by Weaker Eurozone Confidence and Industrial Production

Signs that the Eurozone economy has been affected by US trade protectionism talk and trade war jitters have weighed on the Euro this week.

Tuesday saw the publication of ZEW’s June economic sentiment surveys from Germany and the Eurozone, which came in short of expectations in all major prints.

This was followed on Wednesday by the Eurozone’s employment results from Q1, and industrial production figures from April.

While the Eurozone’s employment change figures beat expectations quarter-on-quarter, the industrial production results came in well short of forecasts.

This has prevented it from holding its best levels against a weaker Australian Dollar.

Australian Dollar (AUD) Exchange Rate Supported by Decent Australian Consumer Confidence

While Australia’s business confidence data has disappointed investors this week and concerns about US trade protectionism has weighed further on risky trade-correlated currencies, the Australian Dollar recovered slightly from its worst levels on Wednesday.

This was thanks to Westpac’s June consumer confidence results, which marked a modest but solid improvement over May’s print.

The consumer confidence index rose from 101.8 to 102.2, while the confidence change figure improved from -0.6% to 0.3%.

Still, Westpac analysts noted that the data did not point towards an uptrend in consumer demand. According to Matthew Hassan, Senior Economist at Westpac:

‘While the improved tone to sentiment compared to last year is welcome, the mix is still not pointing to a sustained lift in consumer demand,

That will be mildly disappointing for the RBA with their forecast for above trend growth this year and next resting in part on a lift in consumption growth.

As a result, the Euro to Australian Dollar (EUR/AUD) exchange rate didn’t fall far from its weekly highs.

Euro to Australian Dollar (EUR/AUD) Forecast: European Central Bank Anticipated

Part of the Euro’s resilience this week has been due to market expectation that the European Central Bank (ECB) will soon discuss its plans to withdraw Eurozone quantitative easing (QE) by the end of the year.

ECB officials have taken a relatively optimistic stance over the past week, boosting market confidence that the bank is not significantly concerned about Eurozone politics or trade jitters.

As a result, investors are highly anticipating the ECB’s policy decision on Thursday, particularly any comments from the bank regarding the tapering of QE.

If the bank expresses confidence that QE will be tapered towards the end of the year, the Euro could see stronger demand towards the end of the week as Eurozone political and trade jitters continue to lighten.

On the other hand, if the ECB is surprisingly dovish about issues like the possibility of a trade war, the Euro could weaken and EUR/AUD could be in for a week of losses.

The Australian Dollar could more easily push EUR/AUD lower if Thursday’s Australian job market results impress investors and boost Australian Dollar support.