Euro (EUR) Exchange Rate Forecast to Advance against the ‘Aussie’ (AUD) after Eurozone Unemployment Bettered Expectations
The Euro to Australian Dollar (EUR/AUD) exchange rate rallied by around 0.8% on Tuesday morning.
After manufacturing output in China slumped beyond expectations, market sentiment dived considerably. This caused the Euro to strengthen versus its major peers thanks to its safe-haven credentials. This is despite some traders fearing that Euro price pressures may cause the European Central Bank (ECB) to expand quantitative easing. Analysts at financial services group Nomura said they expected the ECB to take no new steps, but they added that ‘the risk of further ECB action has clearly increased’
In addition to dampened risk-appetite causing the Euro to climb, European economic data produced mostly positive results. German Unemployment held true to the median market forecast, but Italian Unemployment significantly bettered estimates. This caused the Eurozone Unemployment rate, as a whole, to better the market consensus of 11.1%; with July’s result actually dropping to 10.9%.
The Euro to Australian Dollar (EUR/AUD) exchange rate is currently trending in the region of 1.5903.
Australian Dollar (AUD) Exchange Rate Forecast to Dive against the Common Currency (EUR) on China Slowdown Fears
With market sentiment diving in response to China’s less-than-ideal manufacturing print, the ‘Aussie’ declined versus most of its currency rivals. This is despite a comparatively positive result for Australian manufacturing output, which rose to 51.7 in August. However, with Asian cues causing downward pressure on commodities futures, the ‘Aussie’ is losing ground versus its major competitors.
The Reserve Bank of Australia (RBA) Interest Rate Decision saw the South Pacific central bank hold the cash rate at 2.0%. This was in line with most analysts’ predictions given that the recent situation in China has aided the RBA’s attempts to devalue the Australian Dollar. However, the central bank was still relatively dovish with regards to policy outlook. The weaker ‘Aussie’ is ‘having an increasingly supportive impact on sectors like education and domestic tourism,’ said Justin Tyler, an investment manager at Aberdeen Asset Management Ltd. in Sydney. ‘However, the RBA remains aware of the risks posed by potential weakness on the part of our major trading partners, particularly China.
The Euro to Australian Dollar (EUR/AUD) exchange rate dropped to a low of 1.5739 during Tuesday’s European session.
Euro to Australian Dollar (EUR/AUD) Exchange Rate Forecast to Hold Gains ahead of US Manufacturing
The Euro to Australian Dollar (EUR/AUD) exchange rate is likely to hold gains for the remainder of Tuesday’s European session given the lack of further domestic data publications pertaining to either Europe or Australia. With that being said, however, there is the possibility for EUR/AUD volatility once US data is released. If the US Manufacturing PMI prints positively, for example, the ‘Aussie’ is likely to extend losses versus its major peers.
Looking ahead to Wednesday, Australia’s Gross Domestic Product data will be of significance and is very likely to cause changes for the EUR/AUD pairing. The Eurozone Producer Price Index is unlikely to have as significant an impact, but market sentiment will probably drive shared currency volatility.
The Euro to Australian Dollar (EUR/AUD) exchange rate reached a high today of 1.5980 during Tuesday’s European session.