Australian Dollar Euro Exchange Rate Struggles as Euro Recovers from Lows
The Australian Dollar Euro exchange rate struggled to hold its ground when Asian markets opened on Monday, as while the ‘Aussie’ slightly recovered from last week’s bearishness the Euro’s own recovery was stronger. AUD EUR ended last week’s trade near 0.69 and has trended close to this level since.
If you're looking to make an international money transfer, we recommend TorFX.
Australian Dollar (AUD) Remains Limp on Slew of Downward Factors
Risk traders have had little to be cheery about since protectionist Donald Trump was elected as the next President of the USA. The election result has left risky trade-correlated currencies like the ‘Aussie’ slumping ever since, which has been the primary reason for the Australian Dollar’s recent downward trend.
Various other factors have also weighed on AUD demand, including a disappointing Australian October employment report published last week as well as plummeting prices of iron ore, Australia’s most lucrative commodity.
With commodity prices still down and speculation that the Reserve Bank of Australia (RBA) may renew its easing bias in the face of disappointing employment figures, there were simply too many downward factors on the ‘Aussie’ left over from last week to allow a solid recovery against the Euro on Monday.
Euro (EUR) Rebounds from Lows on Hopes of Fighting Protectionism
After the Brexit and Trump votes throughout the year, fears that populist protectionism would rise in Eurozone politics too have weighed considerably on the Euro in recent weeks.
Protectionism is seen by some analysts as one of the biggest threats to the Euro project. If a key Eurozone nation were to pull out of the bloc due to protectionist politics, some predict it could be catastrophic for the shared currency.
On Monday the Euro recovered from its recent lows, partially due to news that Francois Fillon had won the first round of the French Republican party’s primary elections.
Markets perceive Fillon to be the best chance the Republican party has of beating France’s protectionist party the National Front in 2017’s election. This left Eurozone traders feeling slightly less concerned about rising protectionism.
Australian Dollar Euro Exchange Rate Forecast: Further Lows Expected for AUD EUR
It’s unlikely the Australian Dollar Euro exchange rate’s current movement will shift in favour of the Australian Dollar in the coming days.
Reserve Bank of Australia (RBA) and iron ore concerns continue to weigh on the ‘Aussie’, as well as market anxiety about who US President-elect Trump will pick for his government’s cabinet jobs.
If Trump’s final staff picks include anti-trade officials, this will indicate to investors that the US could become anti-trade under the Trump administration which would leave the risky Australian Dollar even weaker.
However, if Trump picks more pro-trade staff, markets could continue to calm and demand for risk-correlated currencies could continue to normalise.
As for the Euro, upward factors in the shared currency will also be limited. With the Italian constitutional referendum approaching and polling figures looking bad for Prime Minister Matteo Renzi’s proposal to reform the constitution, concerns about rising populism will continue to weigh on Euro trade.
This means that while AUD EUR is unlikely to hold any solid recovery on downside AUD factors, its losses will also be limited by ongoing Eurozone concerns.
At the time of writing, the Australian Dollar Euro exchange rate trended in the region of 0.69, while the Euro Australian Dollar exchange rate traded at around 1.44.