EUR/AUD Exchange Rate Flat as Australian Business Conditions Sink
The Euro Australian Dollar (EUR/AUD) exchange rate is steady today and is currently trading around AU$1.6183 on the inter-bank market.
The Australian Dollar (AUD) is flat against the Euro (EUR) following today’s publication of the Australian business conditions figures for April, which fell below consensus to 3.
The US-China trade spat, however, is weighing on market confidence in the risk-averse Australian Dollar, with the two superpowers engaged in heated trade discussions.
As China is Australia’s largest trading partner, this has proved a strain on the ‘Aussie’ this week.
US President Donald Trump hit out against China, tweeting:
‘I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. You had a great deal, almost completed, & you backed out!’
China have hit back against the US by hiking up tariffs on $60bn of US imports, further weighing on world markets today.
EUR/AUD Exchange Rate Steadies as German Economic Sentiment Drops
The Euro stabilised against the Australian Dollar following the publication of the German ZEW survey for economic sentiment in May, which sank below the forecast increase of 5.0 to a disappointing -2.1.
Achim Wambach, President at ZEW, commented:
‘The most recent escalation in the trade dispute between the United States and China again increases the uncertainty regarding German exports, a key factor for the growth of the gross domestic product.’
Today also saw the publication of the Eurozone’s ZEW survey of economic sentiment for May, which also sank to a worse-than-expected -1.6, further weighing on the single currency.
However, some of these losses were fought off the Euro’s safe-haven status, and with increasing volatility between the US and China, many traders have invested in the single currency instead.
The Eurozone’s industrial production also showed some signs of recovery, however, although this has failed to markedly improve the Euro’s strength against the ‘Aussie’ today.
EUR/AUD Forecast: US-China Trade Tensions Could Further Weigh on ‘Aussie’
Euro traders will be looking ahead to tomorrow’s printing of the flash German GDP figures for the first quarter, and with expectations running high on an increase, this could improve the EUR/AUD exchange rate.
These will be followed by the prelaminar Eurozone GDP figures for the first quarter, which are expected to hold steady at 0.4%.
‘Aussie’ investors, meanwhile, will be awaiting the publication of the Chinese retail sales figures for April, and with any signs of an improving Chinese economy, this could benefit the AUD/EUR exchange rate.
The EUR/AUD exchange rate will remain sensitive to ongoing US-China trade talks, and with tensions rising, this likely to weigh on the Australian Dollar.
