The EUR has reasons for weakness after the last batch of PMI data points released on the 23rd of June. The German June PMI flash readings came in below the market’s minimum expectations as did the Eurozone’s composite and services PMI’s. This means that the ECB are facing a slowing Eurozone and this may counter some of the calls for more aggressive rate hikes. The slowing potential growth outlook for the Eurozone can weigh on the euro from here.
The AUD has reasons for strength with the RBA just starting their rate hiking cycle. Also, the more optimistic moves from China this last week as more and more COVID restrictions get lifted are a boost to the AUD.
The seasonals also favour EURAUD selling.
From July 01 through to July 23 the EURAUD has fallen 11 times over the last 15 years. The average fall has been -0.78%. Will EURAUD repeat this seasonal pattern again this year in line with the seasonal pattern?
Major trade risks: Sharp falls in Iron ore and copper prices can weaken the AUD. If China goes into more COVID lockdowns this can weaken the AUD.
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