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Concerns Rise over Chinese Growth, Australian Dollar Euro Exchange Rate Stable

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The Australian Dollar to Euro (AUD EUR) exchange rate continues trending flatly this week as it is pressured by concerns over a slowdown in the Chinese economy in 2017.

Australian Dollar (AUD) Softened by Fears of a Chinese Slowdown

The Australian Dollar has struggled to advance this week following comments from Chinese president Xi Jinping in which he said that that China’s economy may miss its target of 6.5% growth in 2017.

The news of a potential slowdown in Australia’s largest trading partner weighed on the ‘Aussie’ and prompted a slight decline in commodity prices, although it was prevented from falling further by a report from state media agency Xinhua on Wednesday that appeared to contradict the President as it indicated that China would continue to target 6.5% growth next year.

Euro (EUR) Stifled as Cost of Monte dei Paschi Bailout Expected to Grow

The Euro has also suffered this week as the European Central Bank (ECB) forecast that the bailout of Monte dei Paschi may cost the Italian government more than the €6.5bn initially planned.

The ECB believes that the cost may be considerably higher as it estimated that the capital shortfall in Monte dei Paschi was €8.8bn, rather than the €5bn the bank had originally sought from investors earlier this month.

However, officials in Rome refuted the claims and said that they were confident that the €20bn approved to help Italy’s struggling banking sector would be more than adequate, helping to ease market concerns.

AUD EUR Forecast: Australian Credit Report due on Friday

The AUD EUR exchange rate may appreciate slightly on Friday following the release of the latest Australian Private Sector Credit figure, which is expected to rise from 5.3% to 5.4% in November.

Meanwhile, a lull in major data releases over the Christmas period is likely to mute any shifts between the currency pairing and movement will likely be triggered by additional information on China’s growth or the situation in the Eurozone.

Current Interbank Exchange Rates

At the time of writing the AUD/EUR exchange rate was trending around 0.69 and the EUR/AUD exchange rate was trending around 1.45