EUR/AUD Exchange Rate Flat as Eurozone Trade Balance Shrinks
The Euro Australian Dollar (EUR/AUD) exchange rate is range bound this morning as a shrinking Eurozone trade balance led to muted demand for the single currency.
At the time of writing the EUR/AUD exchange rate is virtually unchanged from its opening levels this morning, leaving the pairing on track to close the session close to the week’s starting levels.
Euro (EUR) Exchange Rates Stalls Amid Shrinking Trade Balance
The Euro (EUR) is trending in a tight range against the Australian Dollar (AUD) and the majority of its other peers this morning, in the wake of the Eurozone’s latest trade figures.
According to data published by the European statistics agency the Eurozone’s trade surplus narrowed from €22.7bn to €17.bn in July, falling below the €18bn surplus forecast by markets.
While the headline figures were of little note, the data also revealed that the Eurozone’s trade surplus with the US has grown considerably over the last year, prompting some concerns that this could complicate the EU’s attempts to smooth over trade relations with the Trump administration.
Australian Dollar (AUD) Exchange Rates Stalls on Ongoing Trade Uncertainty
At the same time the Australian Dollar (AUD) has fallen back in the end of this week’s session as hopes of a possible easing of trade tensions between the US and China were smashed as the two counties knocked heads over trade once again.
Media reports suggested yesterday that the Whitehouse may have been feeling pressure to end the trade dispute, spurring hopes of high levels talks between the US and China.
However these reports were quickly refuted on Twitter by President Donald Trump as he claimed the US administration was under no pressure to seek an early deal with China.
The Wall Street Journal has it wrong, we are under no pressure to make a deal with China, they are under pressure to make a deal with us. Our markets are surging, theirs are collapsing. We will soon be taking in Billions in Tariffs & making products at home. If we meet, we meet?
— Donald J. Trump (@realDonaldTrump) September 13, 2018
In response China’s state-run newspaper, China Daily has insisted that Beijing will not be deterred by Trump’s threat, as it published a statement which read:
‘The Trump administration should not be mistaken that China will surrender to the U.S. demands. It has enough fuel to drive its economy even if a trade war is prolonged.’
With both countries appearing to double down on their stances on trade it looks ever more likely that they are head towards a full-blown trade war, something that is dragging on trade dependant currencies like the Australian Dollar this morning.
EUR/AUD Exchange Rate Forecast: Weak Eurozone PMIs to Undermine the Euro?
Looking ahead to next week’s session, the Euro Australian Dollar (EUR/AUD) exchange rate could be driven lower as the Eurozone publishes its latest PMI figures.
Economists forecast the latest reading for the bloc’s private sector will show that growth continued to slow this month, likely dragging on the Euro on fears this could weaken Eurozone GDP in the third quarter.
Meanwhile movement in the Australian Dollar is likely to be driven by the Reserve Bank of Australia’s (RBA) latest economic bulletin, with the ‘Aussie’ expected to slide if increased trade uncertainty leads to a gloomy outlook from the bank.