AUD Exchange Rates Buoyed by Record-High Business Conditions Survey
The Australian Dollar Euro (AUD/EUR) exchange rate remained within a narrow band on Tuesday, unperturbed by the steady acceleration in US inflation and bolstered somewhat by optimism for Australian business conditions.
According to Australia’s most respected business survey published by NAB, business conditions hit a new record high in February, with higher sales, employment and profitably conditions driving the index up to 21 points – the highest reading since the survey began in March 1997.
This occurred despite Australia’s economy struggling with growth of 2.4% last year, due to weak business investment and net exports.
In respect to overall confidence, however, things were a bit gloomier, with the confidence reading falling to 9 in February, down from January’s score of 11 and matching the market forecasts.
This may have been the lowest reading since November last year but the figure still remains above average, suggesting that the impact was relatively limited.
This outlook was reflected by NAB Chief Economist Alan Oster, who shared his thoughts on the results:
‘The fall in confidence may reflect the turbulence seen in international financial markets in early February, but confidence remains above average, suggesting that the impact was relatively limited’.
AUD/EUR Exchange Rate Limited as OECD Upgrades Bloc Growth Outlook
The AUD/EUR exchange rate encountered pressure on Tuesday in the form of an updated economic growth forecast from the OECD.
The organisation upped its economic growth forecast to 2.3% in 2018 and 2.1% in 2019, citing global economic expansion and robust investment growth as factors that will drive trade and employment higher.
Nonetheless, the report did also note the risk of potential trade tensions and how these could be damaging for growth and jobs.
This is particularly pertinent for the bloc, as any retaliatory measures levied against the US tariffs on steel and aluminium could threaten the EU’s already sizable trade surplus with the United States.
In other news a speech yesterday from European Central Bank (ECB) Policymaker Benoit Coeure knocked the single currency, with Mr Coeure asserting that he does not see interest rates moving from ‘very low levels’ for the foreseeable future.
This was, however, rather consistent with the attitude of the central bank, hence its influence was predominantly limited.
Australian Dollar Euro (AUD/EUR) Exchange Rate Forecast: RBA Bulletin and Eurozone Inflation in the Spotlight
The Australian Dollar to Euro (AUD/EUR) exchange rate could encounter greater volatility as the week progresses, with the RBA’s economic bulletin, due Thursday, liable to cause a stir.
The bulletin provides a comprehensive summary of economic activity over prior months as well as revealing the RBA’s outlook for monetary policy.
If the bulletin points to poor economic activity or a downbeat sentiment then the ‘Aussie’ Dollar could come under fresh pressure, particularly given the recent cautious forward guidance from the RBA.