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Imminent Australian Record-Breaking Growth Weakens EUR AUD Exchange Rate

The Euro has traded tightly against the Australian Dollar today, ahead of potentially historic Australian GDP growth figures.

  • EUR AUD rate tight at 1.5034 – AUD EUR trades at 0.6650
  • Euro dips on retail disappointment – Irish data proves similarly weak
  • Australian Dollar advances despite RBA caution – AU central bank says ‘business as usual’
  • Euro recovery possible on ECB optimism – High hopes of record-breaking Australian growth

The Euro’s recent trading against the Australian Dollar represents a weekly low, having fallen from an opening weekly exchange rate of 1.5184.

Euro Declines on Eurozone Retail Slowdown

The Euro’s close trading against the Australian Dollar today has been caused by a dip in Eurozone-wide retail figures, covering a PMI in May and retail sales in April. The falling figures did not indicate contraction, but still disappointed Euro traders.

Additionally, Ireland has seen a slip in services activity and a -1% drop in annual industrial production, further lowering Euro demand.

Australian Dollar Appreciates despite Central Bank Caution

The Australian Dollar has made marginal gains against the Euro today, following another interest rate freeze from the Reserve Bank of Australia (RBA).

While the RBA’s official statement did point to further interest rate freezes in the future, it also repeated the message that the economy is growing slowly but steadily.

EUR AUD Forecast: Will Australian GDP Stats Worsen Euro to Australian Dollar Trading?

The Euro could rebound against the Australian Dollar over the rest of the week, when high-impact GDP figures come out before a European Central Bank (ECB) press conference.

In the former case, Thursday’s third estimates for first quarter Eurozone GDP are expected to show a slight decline on the year. This result could lower confidence in the Euro, but conversely a rise would be unexpected and could boost Euro demand.

The main event, the European Central Bank (ECB) interest rate decision, is forecast to bring another rate freeze at 0%. More impactful will be the following press conference by ECB President Mario Draghi.

Economists surveyed by Bloomberg predict that Draghi will declare risks to Eurozone growth to be balanced. In practice, this means that the ECB could finally be on its way to tightening monetary policy. Despite these predictions, however, no fireworks are forecast from Draghi’s speech, as Phillippe Gudin of Barclays says;

‘The Governing Council is likely to remain very cautious in its communication about the exit strategy in an environment where the outlook for inflation remains bleak’.

For the Australian Dollar, major gains could come when Wednesday’s GDP growth rate figures are announced. This is in spite of forecasts for a quarterly and annual slowdown in the first quarter.

As long as Australian GDP remains positive, it will represent 103 quarters without recession, beating the Netherlands and setting a new world record.

The test of this news will be whether the stats inspire trader confidence in Australia’s economic growth, or whether traders are more concerned about a slowdown in economic activity at the start of 2017.

Current Interbank EUR AUD Exchange Rates

At the time of writing, the Euro to Australian Dollar (EUR AUD) exchange rate was trading at 1.5021 and the Australian Dollar to Euro (AUD EUR) exchange rate was trading at 0.6654.