It has been a particularly tough month for the euro against the Australian dollar, with the added support from Central Banks around the world providing investors with the confidence to reach out to riskier currencies despite the uncertainty emanating from COVID-19.
The risk from the EU’s point of view however, is the lack of unity when deciding how that support should be provided. Indeed, the European Central Bank recently agreed to loosening its criteria with regards to its bond purchasing scheme with leaders adhering to a trillion euro fund.
This in turn should help feed the flow of funding across the bloc and keep unemployment levels under control. However there has been a growing division in stance amongst leading EU members which could cause confusion within the markets and sap investor confidence as a result. For example, the Polish government have made it clear they are looking at enforcing new takeover rules that would prevent foreign investment from taking ownership of Polish companies. From a similar nationalistic standpoint, Macron has challenged France to ensure the nation is far more self-sufficient within the agricultural and medical fields.
Currently the EUR AUD pairing is trending at 1.69 on interbank exchange rates, its lowest level since the start of March. There does seem to be plenty of data out this week from down under however, that could drive the change in trend for Australian dollar exchange rates. If you have an upcoming requirement, feel free to register your interest on the link below.
Trading Data From Australia’s Leading Partners to Make the AUD More Expensive?
Positive news came out yesterday from Australia’s second largest trading partner Japan. The Bank of Japan has ramped their bond buying scheme up another level despite the concerns of falling back into deflation in a bid to keep spending levels high. The hope from Australia’s position is that this could provide leading import/export relationships that extra lifeline. This could keep the prospect for an accelerated recovery at the end of the lockdown high, and in turn help drive investor appetite in the Australian dollar moving forward. The same could also be said for this evening’s key trading data from New Zealand.
As a trend, New Zealand’s trade levels have gradually been climbing relatively consistently since 2016 despite the numerous shifts if political stance during that period. IT will be interesting to see how the figures down under stack up compared to the heavy falls in activity seen across the northern hemisphere.
Perhaps the most immediate driver to keep an eye if you are in the market for Australian dollars could be tonight’s pivotal inflation data produced by the Reserve Bank of Australia. As we have seen in Japan over the last couple of weeks, the potential consequences of deflationary pressures can have a considerable on investor appetite and so it will be interesting to see how this affects the EUR AUD pairing should we see a contraction greater than expected.
Get in touch using the form below for more information on how your upcoming currency exchange could be impacted by these and other factors in the short term. I’ll be happy to contact your personally and discuss your requirements.