AUD to EUR Rate: Reserve Bank of Australia Promises Huge Monetary Stimulus Package to Support Australian Economy

AUD to EUR Rate: Reserve Bank of Australia Promises Huge Monetary Stimulus Package to Support Australian Economy

The Australian dollar has held its own during last weeks trading against the euro. Towards the start of the coronavirus situation we has seen the Australian dollar take heavy losses against the majority of major currencies. The Australian dollar is not a destination of choice among investors as AUD is considered to be a riskier, commodity based currency. Investors seek out safe haven currencies in times of global economic uncertainty such as the US dollar or Swiss franc. It will be interesting to see if the US dollars popularity wanes as cases escalate State side. It is important to realise there is no public health care system in the US and this could mean the virus will spread in an easier fashion. It is also being described as the epicentre of the breakout in the press.

RBA Promise Monetary Stimulus Package

The Reserve Bank of Australia (RBA) have now promised huge monetary stimulus which has provided some reassurance and staved off further losses. The Eurozone however have not been so bold, the European Central Bank has committed to €750 billion in stimulus but this is not considered to be enough in current circumstances. The EU and the ECB are yet to agree on a collective response. France and Italy are calling on collective assistance but Germany are firmly against the idea not wishing to take on further debt for other EU members.

Poor Eurozone Economic Data Weighs on the Value of the Euro

Eurozone Services PMI fell to 26.4 in March, from 52.6 in February in Friday’s data, the worst reading since records began. In Italy, services PMI fell to a record low of 17.4 in March from 52.1 in February. Chief business economist at IHS Markit, Chris Williamson said “The data indicates that the eurozone economy is already contracting at an annualised rate approaching 10%, with worse inevitably to come in the near future.”

Moving forward if we see a collective stimulus package announced in the Eurozone’s we could see euro strength or if no decisive action is taken then EUR could remain fragile.

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