Australian Dollar Euro Exchange Rate Plummets to New Two-Week Low as Political Tensions Rise
The Australian Dollar to Euro (AUD EUR) exchange rate nosedived overnight on Tuesday as market risk appetite collapsed following growing geopolitical tensions across the world.
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Investors became increasingly cautious as the US stepped up its rhetoric against Russia over the alleged use of chemical weapons by the Assad regime, with U.S. Secretary of State Rex Tillerson denouncing Russian support of the Syrian government as he arrived in Moscow for talks.
There are also rising concerns over tensions with North Korea as a US navy group reroutes closer to the Korean peninsula following threats made by Pyongyang, with US President Donald Trump responding in kind as he tweeted this morning;
‘North Korea is looking for trouble. If China decides to help, that would be great. If not, we will solve the problem without them! U.S.A.’
Observers have begun to give more credibility to Trump’s comments after the US launched a number of missiles at Syria last week, with investors flocking to more stable markets and assets as they fear a further escalation over the coming days.
While further political uncertainty was also sowed by the upcoming French elections, The Euro was able to trend higher thanks to an impressive jump in German consumer confidence.
The ZEW Institute’s economic sentiment index surged to 19.5 in April, up from 12.8 the month before and easily beating expectations that confidence would only rise to 14.0.
Sentiment was largely improved thanks to the robust economic figures from Germany in the first quarter, with industrial production, retail sales and a strong labour market all contributing to a more upbeat outlook from consumers, with economists forecasting that economic activity will show exceptional resilience over the coming six months.
However the Australian Dollar may attempt recoup some of its losses later today if Westpac’s Consumer Confidence Index reports that Australia consumer sentiment has continued to rise in April.
A rally in AUD EUR is also likely to be aided by the release German Wholesale Prices on Wednesday as analysts predict that prices will slump from 0.5% to -0.2% in March.
Current Interbank Exchange Rates
At the time of writing the AUD EUR exchange rate was trending around 0.70 and the EUR AUD exchange rate was trending around 1.41