The Euro (EUR) Exchange Rate Softened against the ‘Aussie’ (AUD) after China’s Stock Market Rallied in the Last Hour of Trade
The Euro to Australian Dollar (EUR/AUD) exchange rate cooled by around -0.5% on Tuesday afternoon.
Demand for safe-haven assets dampened considerably during Tuesday’s European session after China’s equity market finished the Asian session having advanced for the first time in five days. The equity market gains can be attributed to speculation that state-backed funds bought shares after economic data showed signs of China’s weakening economy. As a safe-haven asset, the single currency declined during Tuesday’s European session as traders looked to purchase high-yielding assets.
European economic data produced mixed results erring towards positivity. Of particular significance was second-quarter Eurozone Gross Domestic Product which bettered estimates on both an annual and quarterly basis. The official Eurostat report says, ‘Household final consumption expenditure had a positive contribution to GDP growth both in the Euro area and the EU28 (+0.2 and +0.3 percentage points). Gross fixed capital formation had a negative contribution to GDP growth in the Euro area (-0.1 pp) and was neutral in the EU28 (0.0 pp). The contribution of the external balance to GDP growth was positive for both zones, while the contribution of changes in inventories was negative.’
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5978.
Australian Dollar (AUD) Exchange Rate Predicted to Strengthen against the Shared Currency (EUR) on Market Sentiment
After China’s equity market closed the session 2.9% higher, market sentiment improved. This saw heightened demand for risk-correlated currencies such as the Australian Dollar. China’s equity market recovered amid speculation that Beijing intervened with state-backed funds after domestic data highlighted China’s ongoing economic struggles. ‘Trading is very volatile as the volume is extremely thin,’ said Castor Pang, head of research at Core-Pacific Yamichi Hong Kong. ‘State funds may be focusing the purchase on some large companies including financials and helping with a rebound in the broader market.’
Australia’s economic data produced disappointing results although the publications had minimal impact on ‘Aussie’ movement during Tuesday’s European session. August’s NAB Business Conditions dropped from 4 to 1, and the ANZ Roy Morgan Weekly Consumer Confidence Index softened from 113.3 to 106.7.
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.5983 during Tuesday’s European session.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Losses ahead of Australian Consumer Confidence
Given the absence of further domestic data publications, the Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold losses for the remainder of Tuesday’s European session. With that being said, if US data prints positively the Australian Dollar could soften.
Wednesday should see EUR/AUD volatility with several Australian economic data publications due for release. Westpac Consumer Confidence, Home Loans, Investment lending and Value of Loans will all be of interest to those invested in the Australian Dollar. With a complete absence of European economic data on Wednesday, however, the common currency is likely to see volatility as a result of changes in market sentiment.
The Euro to Australian Dollar (EUR/AUD) exchange rate climbed to a high of 1.5979 during Tuesday’s European session.