EUR Strengthens against Australian Dollar as German Factory Orders Rise
Today the Euro (EUR) has consolidated its recent gains against the Australian Dollar (AUD), showing a modest rise of 0.1% in early trade.
Helping the Euro along was the release of the latest set of German factory orders which revealed higher-than-expected growth during the month of August.
A sharp rise in reported orders was revealed, with a jump from -0.9% to 2%, beating the expected 0.5% print.
Commenting on the news, a Germany Economy Ministry official stated:
‘The strong order increase from outside the euro area shows that German industrial goods continue to be in demand globally, irrespective of trade conflicts.
‘A positive economic trend should take the upper hand again in the fourth quarter.’
Australian Dollar Falls against Euro despite Better-than-Expected Trade Surplus
An unexpected increase in Australia’s trade surplus in August proved not to be enough to support the Australian Dollar (AUD) against the Euro yesterday as market risk appetite diminished.
Although it seems the Australian economy managed to shake off the rising global trade tensions, with exports rebounding 1% on the month, AUD exchange rates continued to pursue their losing streak.
Concerns about US trade policy and the possibility of a trade war have eased in recent days, although the threat of a prolonged US-China trade spat remains to cast a shadow over AUD exchange rates.
As Australia relies heavily on exporting iron ore and other commodities, and with their prices continuing to weaken on global markets, this is likely to weigh heavily on the Australian economy, potentially affecting growth in the third quarter.
More Upbeat Australian Retail Sales do little to Help AUD Rates
Retail sales data released overnight was expected to show a modest uptick of 0.2% for the month of August, up from no growth at all during July.
When the figure printed it revealed a better-than-expected rise of 0.3%, bolstering confidence in AUD investors that a pick-up in consumer spending could be underway.
This upbeat figure was negated to some extent, however, by a matching fall in new homes sales.
Figures showed a -2.9% fall on the month. Coming after July’s -3.1% drop this number did not bode well for the Australian construction sector, further helping to suppress AUD.
EUR/AUD Exchange Rate Outlook: German Industrial production in Focus
Looking ahead to next week, some salient German ecostats are due for publication on Monday and Tuesday.
Figures for industrial production growth on Monday and an expected larger trade surplus on Tuesday could cause more gains for the Euro to Australian Dollar (EUR/AUD) exchange rate.
Beyond that, Wednesday will reveal Australia’s latest Westpac Consumer Confidence Change for the current month, with expectations for it to show a -3% decline.