We have seen the Australian dollar fight back against the euro over the course of April, witnessing almost a 10% improvement in exchange rates over the course of the month of April.
The AUDEUR exchange rate had previously dropped off by almost 20% between the middle of February and the start of April, so this is simply a softening of what had been quite a large blow, but needless to say it is encouraging for those holding Australian dollars that may be looking to buy a property in the Eurozone once this lockdown is lifted, or those that have worked in Australia and want to send money home to Europe.
What happens next is hard to predict, tomorrow we have the release of Chinese GDP (Gross Domestic Product) figures which are expected to be ‘historic’ according to media reports. Chinese economic data often has an impact on the value of the Australian dollar due to the countries’ close trade ties, so this is one release that may turn the current trend on its head. We will likely start to see what impact the lockdowns had on the Chinese economy and a big drop off may dent global investor sentiment quite considerably.
There are still concerns over what comes next for Europe too, with Spain and Italy being hit hard by Coronavirus it is likely that they will find economic troubles as the year goes on, along with many other economies within the Eurozone. A Coronabond has been released to assist these economies, however with very strict terms which may mean that a number cannot partake due to their debt to GDP ratio.
Talks are ongoing as to how the Eurozone can negotiate these troublesome times, and the hangover that will likely be heavy from COVID-19. This will be something to watch and monitor, if an agreement is reached that investors are confident in we may see euro strength; the longer discussions are ongoing without a resolution the more likely the euro is to struggle.
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