Euro Weakness Expected Ahead of Anticipated Frail Economic Data

AUD GBP Grinds Higher After Australian Employment Data

The EURAUD exchange rate has continued to fall for the last 5 weeks in a row with current midmarket rates at 1.681 at the start of today’s trading. The fall began on the 18th March where rates resided at 1.89 and have fallen on average 4.2 cents each week to the current levels, although the more severe volatility was seen in the first couple of weeks as opposed to the last three. Much of the market movement is likely to be the contrast seen between the effects the Coronavirus is having on their respective nations. As an example, Australia did not even surpass 100 deaths and a fair way off 10,000 cases which had meant that it had started opening its beaches again and a gradual easing of lockdown measures last week. This comes as neighbouring antipodean nation New Zealand announced that it had “currently” eliminated the virus as community transmission has been halted.

Economic Data and Latest COVID-19 Figures

This week might be a bumpy ride for the Eurozone however, as it is set on receiving a swathe of economic data releases. These publications at present typically just outline the extent to which the pandemic has damaged the economy so very few reports are likely to be taken positively by the markets. Alongside many other releases, the EU will see the European Central Bank (ECB) Lending Survey on Tuesday, Consumer Price Index on Wednesday, Unemployment Rate & Change and GDP Q1 & YoY on Thursday with the ECB Interest Rate Decision and accompanying Monetary Policy statement to finish off the working week. With 1.2mn COVID-19 cases, over 110,000 deaths and unemployment predicted to skyrocket into double digits emanating from an anticipated recession, the figures released this week may give reason to believe that further Euro weakness is to be expected.

For Australia, just the Consumer Price Index from the Reserve Bank of Australia will be released on Wednesday. The consensus, as also mentioned by AMP Capital Chief economist Shane Oliver, is that “it will be the biggest fall in Consumer Price Index since 1962” – a 58 year low. Considering that this crippling announcement is to be released on Wednesday, mid-week trading may see some movement as a result of this release.

Virus update: Light at the end of the tunnel

In more positive news, Italy’s PM Giuseppe Conte has announced that lockdown measures will be eased on 4th May with the Construction and Manufacturing industries set to return to work as the EU member state received its lowest cases numbers in 24 hours in six weeks. Spain’s daily case rise was also the lowest in a month according to Bloomberg. With a cautious approach to returning to work, amongst fears a second virus wave could hit, there appears to be not just positivity for Europe but also, hopefully, for nations worldwide.

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