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Higher Investor Confidence Triggers Euro to Australian Dollar Rally

The Euro has made major gains against the Australian Dollar today, advancing by 1% on news of higher Eurozone investor confidence.

  • EUR AUD rate up to 1.4983 – AUD EUR slides to 6672
  • Euro boosted by rising confidence – Investors unfazed by strong Euro
  • Mixed jobs figures leave Australian Dollar down – Gross profits drop -4.5%
  • EUR AUD losses possible on upcoming sales stats – All eyes on RBA interest rate decision

Trading in the area of 1.4983 today, the Euro has been near its exchange rate against the Australian Dollar since September 1st. This follows a positive reaction to news about the state of investor confidence in the Eurozone.

Euro Surges as Confidence Nears 10-Year High

Today’s main source of Euro support has been the Sentix investor confidence measure for early September. This has shown a rise from 27.7 points to 28.2, representing a slight improvement in investor outlooks.

While a small increase on the face of it, this has been almost the highest figure recorded since the 10-year high result seen earlier in June this year.

Commenting on the good news was Sentix Managing Director Manfird Huebner;

‘[European Central Bank (ECB) President] Mario Draghi should be pleased: the [Eurozone] economy has passed its first light test. August’s uncertainty, caused by the car crisis in Germany and weak US economic data, has not affected the [Eurozone] economy’.

Australian Dollar Tumbles on Lacklustre Business Stats

On a quiet start to the week, the Australian Dollar has dropped against almost all of its peers, posting a -0.7% loss against the Euro among other currencies.

This poor performance comes after an uninspiring set of national business figures, which have shown a -4.5% decline in gross company profits.

Non-mining profits also fell by -0.6%, further lowering the appeal of the Australian Dollar.

The news was not all bad, however, as ANZ Senior Economist Felicity Emmett highlighted;

‘Growth in the wages bill picked up, supported by strong growth in employment. This strength will provide some offset to weak profit growth in GDP’.

EUR AUD Exchange Rate Forecast: Are Euro Losses ahead on Sales Data?

The Euro’s strong advance against the Australian Dollar may prove short-lived, depending on how Eurozone data prints on Tuesday.

Key announcements to watch out for will cover Eurozone services sector activity, as well as retail sales figures. Estimates are for a slight decline in the services index, followed by a later slowdown in reported retail sales.

A sales slowdown might result in the Euro losing ground against the Australian Dollar, though this largely depends on what occurs at the monthly Reserve Bank of Australia (RBA) meeting.

The RBA is due to make its September interest rate decision early in the morning; at the time of writing, no change was forecast from the current rate of 1.5%.

If RBA officials imply that higher interest rates are on the horizon, the Australian Dollar could post some surprise gains against the Euro.

Current Interbank EUR AUD Exchange Rates

At the time of writing, the Euro to Australian Dollar (EUR AUD) exchange rate was trading at 1.4983 and the Australian Dollar to Euro (AUD EUR) exchange rate was trading at 0.6672.