The Euro has bounced back against the Australian Dollar today, rising despite background concerns about the pace of European Central Bank (ECB) policy tightening.
- EUR AUD trades up at 1.5211 – AUD EUR rate falls to 0.6573
- Euro advances despite ECB dovishness – ECB President was highly cautious
- Australian Dollar drops on Joyce disqualification – Deputy PM faces by-election
- Euro could rally on confidence stats – AU trade balance coming up
Australian news has been negative today, with a political upset risking major disruptions for the government.
Euro Back on the Rise after Shattering ECB Press Conference
The Euro has made a minor advance against the Australian Dollar today, following a highly disappointing European Central Bank (ECB) meeting on Thursday.
During the afternoon, ECB President Mario Draghi failed to introduce quantitative easing tapering as some had thought, instead only cutting the bond-buying limit.
This has still left the bank buying up to €30bn every month and Draghi stressed that this could remain the normal limit for many months to come.
One of his comments even suggested that the bank might expand its limit in the future instead of reducing it further; ‘Our program is flexible enough that we can adjust its size’.
Australian Dollar Slips as Deputy PM is Disqualified
The Australian Dollar has lost ground to the Euro and other peers today, following the disqualification of Barnaby Joyce as Deputy Prime Minister.
Mr Joyce has been at the centre of a dual-citizenship scandal for several months, but this has finally come to a head with his removal from office.
Joyce held dual citizenship with New Zealand for decades, but renounced this in August. The disqualification has been retroactive, as Joyce was elected to his position while still under dual-citizen status, something illegal under the Australian constitution.
This has set the cat amongst the pigeons, as if the Joyce is not re-elected in upcoming by-elections, the government will have lost it’s one-seat majority.
Looking at what this could mean for PM Malcolm Turnbull has been Jay Savage, BBC Australian Online Editor;
‘[This] brings only fresh uncertainty for Mr Turnbull. The PM had repeatedly expressed confidence that [Joyce] would be absolved by the court.
Now he faces a parliament where he is more likely to lose votes, and confront greater tactical manoeuvring, at least for the time being.
Most experts believe it is likely that Mr Joyce will win a by-election in his New South Wales seat, possibly with an increased margin.
However, victory is not assured and Mr Joyce could face many rivals. Will such intense national scrutiny affect the vote?
A loss would be a blow for Mr Turnbull, who is already facing several political headaches, including heated debates over legalising same-sex marriage and recognition of indigenous Australians’.
Spate of Eurozone Confidence Stats could Trigger EUR AUD Advance
The Euro has a chance to make significant gains against the Australian Dollar on Monday, if Eurozone confidence figures show growth in October.
The fields will include business confidence, consumer confidence and economic sentiment, but the latest predictions have not been for growth across the board.
The other Eurozone news out on Monday will be German inflation figures. If these stats show growth in October then the Euro could also have a chance at rallying against the Australian Dollar.
Next week’s main Australian news will come later, when the September trade balance is announced on Thursday.
This is tipped to show a sizable expansion of the current trade surplus, which may mean that the Australian Dollar appreciates later in the week.
Current Interbank EUR AUD Exchange Rates
At the time of writing, the Euro to Australian Dollar (EUR AUD) exchange rate was trading at 1.5211 and the Australian Dollar to Euro (AUD EUR) exchange rate was trading at 0.6573.