The headlines are still full of the damage the corona virus is doing to the economy, the Eurozone or for that matter Australia haven’t been any different. Both of these economies have pumped in billions of dollars into their economies, the Eurozone last week and Australia on Monday morning, pledged A$130bn to save their economy, citing the next 6 months could be quite challenging.
AUD is known as a commodity currency is prone to big sells offs, as investors favour moving their funds into safe haven currencies, such as the YEN and USD. As a result AUD has continued its slide against the single currency over the past month, with the market rate 1.7919 at the time of writing. This is on the back of the struggles Spain and Italy have faced, two of the worst hit areas with the highest death rates, investors feel the current stimulus packages provided by the respected countries are not enough and this will leave a whole in the Eurozone.
How the Australian Lockdown is effecting AUD
The worlds economies are expected to contract by 10% it is estimated therefore the current steps being taken need to be maintained. Australia has been less affected by the virus and the lockdowns there not quite to the same level as we have here in Europe, it will be interesting to see if they manage to overhaul this a lot quicker then what we can here, should this be the case we could potentially see the AUD EUR rates drop and gains being made. The next fortnight could be a key indicator to see if this could be the case.
With so much uncertainty till still around, this a very fluid position, indeed a very unique situation for the whole world. At one point last week, 25% of the worlds populations was in lockdown. With no immediate plans for any country to ease back on the restrictions, you can expect volatility to continue. Historically, when the markets are steady investors are more likely to invest in commodities and commodity based currencies, should Australia be on their A-Game this could be a possibility. And of course the never ending Brexit talks will reappear, depending on the talks, the Euro could yet weaken.
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