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Euro Rises 0.4% against Australian Dollar on Growing German Confidence

The Euro has made moderate gains against the Australian Dollar today, having been pushed up by rising confidence about the German economy.

  • EUR AUD rate rises to 1.4765 – AUD EUR trades down at 0.6771
  • Euro boosted by German confidence – Historic highs for German optimism
  • Australian Dollar weakened by BIS forecast – Bank warns of AU financial crisis
  • Further Euro gains possible on Draghi comments – Australian Dollar may recover on confidence stats

The EUR AUD exchange rate advance to 1.4765 still leaves the Euro in a bad position against the Australian Dollar. At the beginning of June, the pairing was trading in the range of 1.5217, before subsequently declining.

Euro Appreciates on Historically High IFO Confidence Figures

The main source of Euro support today has been data from survey company IFO. The company has taken measures of German economic sentiment and figures have risen across the board.

The rise in the business confidence index, from 114.6 points to 115.1, was the best result since 1991. Elsewhere, current conditions and expectations figures also showed growth against forecasts for stagnation or declines.

Commenting on the news was ING-Diba AG Chief German Economist Carsten Brzeski;

‘The industrial revival could be the surprise story of the year in the German economy. As the domestic economy is gaining even more momentum, the biggest risks for the German economy still come from abroad’.

Australian Dollar Slides after BIS Warns of Damaging Debt

Today’s Australian Dollar to Euro losses have come after a warning was issued by the Bank of International Settlements (BIS). The bank has a respected history as an economic forecaster, having warned of the late 2000’s global financial crisis years in advance.

On Australia, the BIS believes that the country is at risk of a possible crash if household debt continues to grow.

As well as making a gloomy forecast for Australia, the BIS also highlighted a possible financial crisis in China. Given that China is Australia’s largest trade partner, this would have a negative knock-on effect on the AU economy.

EUR AUD Forecast: Euro Strengthening Possible on ECB Comments

Looking ahead, the Euro may be pushed up further against the Australian Dollar later today, when European Central Bank (ECB) President Mario Draghi speaks.

Draghi is due to attend two events in Portugal, the first being a meeting with students as part of a ‘Youth Dialogue’.

The likely more-impactful latter event will be Draghi’s remarks at a forum on central banking. While the President is not expected to explicitly comment on ECB monetary policy, his remarks could more broadly show a forecast for the Eurozone economy.

If such an outlook is positive, then the Euro could appreciate on hopes of an upcoming ECB interest rate hike.

The first weekly Australian data will be today’s ANZ Roy Morgan weekly consumer confidence index. Previous confidence stats for June have shown stagnation and a slight decline, so a rise could greatly restore AUD value.

Current Interbank EUR AUD Exchange Rates

At the time of writing, the Euro to Australian Dollar (EUR AUD) exchange rate was trading at 1.4765 and the Australian Dollar to Euro (AUD EUR) exchange rate was trading at 0.6771.