Has the AUD EUR peaked already in 2019?

climbing to the peak

The AUD to EUR exchange rate peaked in April around 0.64, but has since fallen again. A falling AUDEUR trend this year is being driven by a weaker Australian dollar, rather than any strength in the Euro.

In fact, the Euro has been under pressure lately with Brexit and slower economic growth in major Eurozone countries. Meanwhile, the Australian dollar hit 10-year lows recently.

Check today's AUDEUR Forex Rate: Currency Converter and Graph

Bank AUDEUR Exchange Rate Forecasts

So what are the major banks in their AUD and EUR forecasts for 2019, amongst all the political uncertainty from Brexit and slowing growth?

  • ANZ - Predicts the AUDEUR exchange rate will end 2019 around 0.60
  • NAB - AUDEUR forecast shows the exchange rate to be 0.58 at the end of the year - same forecasts since the beginning of the year
  • Westpac - Expect the AUDEUR rate to be 0.62 by December - slightly higher than earlier predictions this year

Is the AUDEUR rising?

Hard to tell. The Aussie dollar is relatively less weak than the EUR, which makes the rate slightly higher, but both currencies are falling. There are many factors that influence this relationship, but here are some of main ones:

  • Australian dollar currency (USD): When the AUD rises, the EUR falls. This is because the AUDEUR is a currency cross or pair. The Australian dollar has been falling relatively more than the EUR since the beginning of the year.
  • Weak EU economies: Most of the countries that are part of the European Union have had weaker economic growth in the first half of 2019. Weaker growth equates to a weaker Euro.
  • Brexit: The EU's relationship with the UK is in a period of uncertainty while Brexit is being finalised. A Brexit deal is important for trade, with the Eurozone being the UK largest trading partner. Prime Minister Boris Johnson has been pushing for a 'no deal Brexit' which is negative for trade. Greater uncertainty can lead to a weaker Euro.
  • US-China trade war: US President Donald Trump is going to increase tariffs on US$250 billion of Chinese imports from 25% to 30% by the beginning of October. This is a key reason why China's growth is slowing and is importing less from the Eurozone. Both the AUD and EUR falls as a result.

Major Foreign Exchange Rates

The AUD and EUR aren't the only currencies that are falling. Major currencies like the British Pound (GBP), New Zealand Dollar (NZD) and Japanese Yen (JPY) are also being influenced by a rising US dollar and weak local conditions.

For Australian dollar cross rates (AUD/USD, AUD/GBP, AUD/NZD, AUDJPY) this means it'll be extra difficult for banks to forecast which direction currencies will go in the future.

Here is a summary of what banks are currently forecasting:

AUDUSD - A pessimistic outlook for the Aussie (AUD) short-term

AUDGBP - AUD/GBP exchange rate predicted to move higher by the end of the year

AUDNZD - A pessimistic outlook for both the Aussie (AUD) and the Kiwi (NZD) near-term

AUDJPY - Banks predict the AUDJPY will continue to fall


What is the AUDEUR?

The AUDEUR pair tells you how many Euros are needed to purchase one Australian dollar.

The EUR is the official currency for 19 of the 28 member states in the European Union (EU), also known as Eurozone or Euro area. The Euro is the second-largest most traded currency in the foreign exchange market, after the US dollar.

How do I forecast the AUDEUR exchange rate?

Investors forecast the movement of the Australian dollar as it relates to the US dollar, by looking at key influences including:

  • Australian dollar forecasts, Euro forecasts, and US dollar forecasts
  • Central banks - namely the Reserve Bank of Australia (RBA) and Governor Philip Lowe, and US Federal Reserve (the Fed or FRB) and Chairman Jerome Powell, European Central Bank (ECB), Bank of England (BOE).
  • Interest rates - linked with central banks that control interest rates and monetary policy. Investors predict how central bank announcements - like interest rate cuts or hikes - will affect interest rate spreads. Central banks can also aim to stimulate an economy in other ways.
  • Local governments - Australian Government and Prime Minister Scott Morrisson, US Government and President Trump, EU's Principle Leaders Donald Tusk; Jean-Claude Juncker; David Sassoli, UK's Brexit and Prime Minister Boris Johnson
  • Australian Economic Data - Economic growth indicators (GDP), Inflation (CPI Core Price Index, PPI Production Price Index), Trade balance (balance between exports and imports of total goods and services)
  • EU Economic Data - GDP, trade balance and inflation
  • US Economic Data - GDP, trade balance and inflation
  • China (plus Hong Kong, Singapore, and rest of Asia) Economic Data - GDP, trade balance and inflation

Does the AUDEUR exchange rate change a lot?

Like most currencies, the Australian dollar exchange rate and the EUR exchange rate can be highly volatile. That’s why it’s popular with traders and why it’s important to consider hedging if you're transferring money overseas. AUD/EUR forecasts can also change drastically, in response to significant currency moves. Many exchange companies or money transfer services offer rate alerts online to help you get the best AUDEUR exchange rate.

Why should I trust the 'Big 4' bank AUDEUR forecasts?

The Australian Dollar and Euro exchange rates can change. A lot. This is because multiple factors influence currency movements that are both local and global. Plus, bank forecasts are generated with a combination of computer modelling and human influence. So while banks have experts that spend long hours modelling future currency moves, there may be factors that can't be predicted. We think it's better to look at exchange rate forecasts as a guide. We also recommend you don't make your financial decisions based solely on bank forecasts, but rather, take into account your personal objectives, financial situation and needs.

Updated: Posted on

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