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Euro Australian Dollar Exchange Rate Falls Despite Strong Eurozone Activity

  • Euro Australian Dollar Exchange Rate Below 1.43 – AUD recovers from lows
  • Eurozone Economic Activity Up in October – Preliminary PMIs impress
  • Update: German Business Sentiment Solid – Euro mixed despite strong data
  • AUD Exchange Rate Forecast: Australian Inflation on Wednesday – Key result could keep RBA easing bets at bay

Euro Australian Dollar Exchange Rate Tumbles Tuesday as AUD Firms

The Euro Australian Dollar exchange rate tumbled to its lowest levels in almost a week throughout Tuesday trade, as Australian Dollar investors firmed ahead of Wednesday’s key Asian session.

Australia’s highly anticipated Q3 Consumer Price Index (CPI) score will be published during Wednesday’s Asian session, and traders are optimistic despite last week’s disappointing Australian employment results. The ‘Aussie’ was also bolstered by a brief risk rally on Tuesday.

If inflation disappoints, the Euro could easily advance against the Australian Dollar as the ‘Aussie’ plunges on higher RBA rate cut bets.

The Euro itself saw little in the way of inspired movement on Tuesday despite strong German business confidence data being published in the morning.

The IFO’s October business confidence surveys for Germany beat expectations in every print. Business climate improved from 109.5 to 110.5, current assessment rose from 114.7 to 115, and expectations improved from 104.5 to 106.1.

(Previously updated 16:41 BST 24/10/2016)

Euro Australian Dollar Exchange Rate Edges Higher Monday

Despite slipping in the morning, the Euro Australian Dollar exchange rate edged higher on Monday afternoon as the Euro was allowed to advance slightly thanks to waning demand for risk-correlated currencies.

An increase in strength in the US Dollar weighed on both the Euro and the Australian Dollar, but the Euro appeared to be the winner of the two on Monday as EUR AUD floated above the week’s opening levels.

If demand for risky currencies continues to slip in the coming days, the Euro could continue to advance against the ‘Aussie’ and reverse some of the pair’s recent losses.

(Published 12:57 BST 24/10/2016)

The Euro Australian Dollar exchange rate continued to slip on Monday despite an impressive set of Eurozone PMIs published in the morning, as investors bought the Australian Dollar from its lows.

EUR AUD lost a cent in value throughout last week’s trade, falling from 1.44 to 1.43. The Australian Dollar was able to hold onto some gains made early in the week and the pair hit a yearly low of 1.41 on Wednesday. EUR AUD recovered on Tuesday and Friday, however.

Euro (EUR) Sentiment Mixed Despite Strong Eurozone Economic Activity

The Euro was undermined last week by the latest news from the European Central Bank (ECB). While the ECB’s policy decision shocked no one, a press conference held by ECB President Mario Draghi afterwards offered some surprises for markets.

Draghi indicated that neither extending nor tapering the ECB’s quantitative easing program was discussed in the meeting. He did, however, indicate that action was likely to be taken in December depending on data published before then.

This has kept the Euro weak since, with EUR exchange rates falling to multi-month lows against some rivals. As a result, the Euro struggled to capitalise on Monday’s generally impressive set of preliminary October PMIs for the Euro bloc.

Among the more notable figures was confirmation that France’s manufacturing sector had finally returned to growth, with the PMI scoring 51.3. Germany’s services sector, which had disappointed in September, bounced back up to 54.1 in October’s flash score, beating expectations.

The Eurozone’s overall scores were higher-than-expected. Manufacturing improved from 52.6 to 53.3, services from 52.2 to 53.5 and the composite print from 52.6 to 53.7. Julien Lafargue, a European equities strategist from JP Morgan, stated;

‘According to the flash PMIs estimates, after a difficult summer, the Eurozone is accelerating again at the start of the 4th quarter.

The improvement in Services in Germany is particularly encouraging as this had been an area of concerns recently. The focus is now likely to switch to inflation dynamics with input costs in Germany rising at the fastest pace in nearly 1.5 years and backlogs of work in the Eurozone accumulating at the fastest rate for over 5 years.’

These figures may stoke hopes that the ECB will avoid extending its easing measures in December, but the Euro trended flatly on Monday regardless of the strong result.

Australian Dollar (AUD) Rebounds from Lows on Commodity Trade

The Australian Dollar plunged towards the end of last week as investors readjusted bets for further easing from the Reserve Bank of Australia (RBA) thanks to a highly disappointing September employment report.

The RBA had previously stated it would be looking at fresh Australian employment and inflation results before deciding whether or not to reintroduce its easing bias.

A drop in demand for risk-correlated currencies also weighed heavily on Australian Dollar demand. Higher December Fed rate hike bets as well as US Presidential election jitters led markets towards safer investments.

However, the Australian Dollar firmed in Monday trade despite dipping risk-sentiment, as investors bought up the AUD from its lows.

News that prices of iron ore, Australia’s most lucrative commodity, had held at their highest levels in over six weeks also bolstered demand for the ‘Aussie’ Dollar.

Euro Australian Dollar Exchange Rate Forecast: Australian Inflation to Influence RBA Bets

As Monday’s Eurozone data did little to bolster Euro demand, the Euro Australian Dollar exchange rate is more likely to be influenced this week by risk-factors and Australian data.

Tuesday’s October German business sentiment scores from IFO could offer the Euro some support if they impress, but a plunge in risk-sentiment is more likely to let the Euro advance.

As the November 8th US Presidential election draws ever-closer, market jitters are only likely to continue. Traders will be drawn towards ‘safe haven’ investments like the US Dollar and away from risky currencies like AUD over the next week in order to protect their assets from uncertainty.

Data publishing during Wednesday’s Asian session will also influence Australian Dollar trade, as Australia’s Q3 Consumer Price Index (CPI) scores will be published.

Current projections see slight improvements in inflation, but if these scores come in below expectations AUD could plummet as speculation on the possibility of further monetary easing from the Reserve Bank of Australia (RBA) will surely re-ignite.

At the time of writing, the Euro Australian Dollar exchange rate trended in the region of 1.42, while the Australian Dollar Euro exchange rate traded at around 0.70.