Consumer Confidence Fails to Boost Beleaguered ‘Aussie’ (AUD) as EUR/AUD Exchange Rate Approaches Yearly High
In spite of a decidedly improved Westpac Consumer Confidence Index, which rose to 99.5 over the forecast of 95.56, the Australian Dollar (AUD) continues to struggle this morning. No doubt further deflation of the Yuan (CNY) is to blame, as news from China remains the dominant influence on the Australasian currencies.
The common currency (EUR), meanwhile, has strengthened further on Greek bailout optimism to push the EUR/AUD pairing to 1.5222, its highest level of the year so far.
Agreement ‘in principle’ for the Greek bailout deal sends the EUR/AUD exchange rate climbing, with the Australian Dollar (AUD) turning dovish as a result of the People’s Bank of China (PBoC) opting to significantly depreciate the value of the Yuan (CNY).
Bullish Run of Australian Dollar (AUD) Ended with Economic Data from China, EUR/AUD Exchange Rate Gains Limited by Bad Investor Confidence
Weak data arrived from China over the weekend, disappointing expectations as the year-on-year Exports in particular reported a decrease of unanticipated severity, contracting by -8.3%. The continued slowdown of the Chinese economy is still weighing on the commodity currencies, with the ‘Aussie’ (AUD) rapidly weakening in response to lose further ground against rivals. Consequently the EUR/AUD pairing hit a peak of 1.4893 early in the day.
Monday also saw some frustration for the Euro (EUR) as the August Sentix Investor Confidence index for the Eurozone failed to meet either the forecast or the previous month’s figure, clocking in at 18.4 to signal a further loss of faith in the European economy.
Unexpected Chinese Yuan (CHY) Depreciation Deals Powerful Blow to Australian Dollar (AUD) Today, EUR/AUD Exchange Rate Reaps Benefits
A shock announcement by the People’s Bank of China (PBoC) in the early hours of today, revealing the significant depreciation of the Yuan (CNY), wreaked havoc on the basket of Australasian currencies to send the value of the Australian Dollar diving across the board. This major deflation in the face of a still-strengthening ‘Greenback’ (USD) naturally raised concerns for the outlook of many neighbouring currencies, with investors fearing a swatch of national banks following suit to remain economically competitive. In the immediate aftermath of the revelation the EUR/AUD exchange rate jumped from 1.4839 to 1.4994 and has continued to move generally upwards in the following hours.
ZEW Economic Sentiment Index data, positive for the Eurozone and surprisingly negative for Germany, was overshadowed this morning by news from Greece. Finance minister Euclid Tsakalotos pronounced the negotiations over a third bailout deal all but concluded. As the ‘white smoke’ went up from Athens the Euro strengthened to consolidate its earlier gains and cement the EUR/AUD pairing’s current positive trend.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast: ‘Aussie’ Unlikely to Recover Rapidly from Downtrend, Single Currency Stands to Rise
Hope may not be entirely lost for the ‘Aussie’ though, with the Westpac Consumer Confidence for August and second quarter Wage Cost Index due out overnight. Reserve Bank of Australia (RBA) Deputy Governor Philip Lowe’s scheduled speech could also give the weakening currency a boost back to its previously strong form, although the Chinese deflation bombshell may ultimately draw out more dovish sentiment and compound the currency’s recent concessions.
Industrial Production figures for the Eurozone could send the EUR/AUD exchange rate higher tomorrow, particularly if a better than expected result is achieved. Later in the week Consumer Price Indexes, GDP reports and meeting accounts of the European Central Bank (ECB) could all prompt movement for the pairing and may even have the potential to drive gains towards another monthly high.
However, as the Greek bailout awaits approval from various European parliaments and with some finance ministers already proving to be a little more reticent over the deal as it stands, the common currency may not have escaped the negative influence of Greece’s troubles.
Current EUR, AUD Exchange Rates
Presently the Euro to Australian Dollar (EUR/AUD) exchange rate is rising significantly in the range of 1.5074, with the Australian Dollar to Euro (AUD/EUR) pairing sharply declining at 0.6632.