Disappointing Eurozone Ecostats Trigger EUR/AUD Exchange Rate Losses Today
Eurozone confidence levels have fallen in October, dropping by more than expected for the business confidence and services sentiment readings.
A broader economic confidence reading has also dropped off, falling from 110.9 points to 109.8 instead of the expected 110 point reading.
Additional losses have been caused by the Q3 Eurozone GDP growth rate estimates, which have been downgraded compared to Q2.
Quarterly growth is tipped to have slowed from 0.4% to 0.2%, while an annual slowdown from 2.1% to 1.7% is also anticipated.
Summing up the market disappointment at these GDP figures, ING’s Bert Colijn has stated:
‘Eurozone GDP growth in 3Q came in at just 0.2% and while one-off factors have influenced the number, it does not seem that growth will return to previous rates anytime soon.
‘In Germany, disrupted car production will have dampened GDP growth significantly in the third quarter, weighing on the Eurozone average.
‘Perhaps more worrying was the stagnation of growth in Italy, which was the first time in four years that the economy did not post growth over a quarter.
‘With budget discussions already tense between Rome and Brussels, this stagnation will only add to concerns.’
Australian Dollar to Euro (AUD/EUR) Exchange Rate Supported by Building Permits Data
The Australian Dollar (AUD) has appreciated and risen against the Euro (EUR) today, hitting a near-monthly exchange rate high.
This advance follows the supportive news that more-than-expected building permits have been granted in September.
The quantity of permits granted rose from a slide of -9.4% in August to growth at 3.3% in September; this beat the expected 3% printing.
Broadly speaking, more permits being granted benefits the Australian economy because it opens the door to higher construction sector activity.
Euro to Australian Dollar Exchange Rate Forecast: Are EUR/AUD Gains ahead on German Inflation Data?
The Euro (EUR) has dropped off against the Australian Dollar (AUD) today, but could trade higher when this afternoon’s German inflation figures come out.
Covering price growth estimates for October, these readings are expected to show a faster pace of year-on-year inflation for the base and harmonised readings.
Higher annual inflation might be enough to cause a EUR/AUD exchange rate rise, not least because this could cause Eurozone-wide inflation rises.
Yearly readings are usually considered more high-impact than monthly figures, so the Euro could appreciate even if the month-on-month readings show a slowdown.
For Australian Dollar traders, the next major data will be Q3 inflation rate figures out on Wednesday morning.
Unlike Germany’s inflation stats, these readings are tipped to show a slower pace of price growth for the year-on-year reading.
A slowdown from 2.1% to 1.9% could devalue the Australian Dollar, as it would reduce the chances of a Reserve Bank of Australia (RBA) interest rate hike.