A near-record breaking drop in Eurozone unemployment has allowed a 0.5% rise in the Euro to New Zealand Dollar exchange rate today.
- EUR NZD rate rises to 1.52 – NZD EUR drops to 0.65
- Euro aided by historic unemployment drop – Eurozone manufacturing revised up
- NZD weakened by housing market analysis – Thinktank targets national issues
- Further Euro gains possible on rising retail sales – NZD drop likely on dairy price index
Matching with forecasts, unemployment dropped from 9.6% to 9.5% in February, triggering Euro gains.
Responding to the lowest unemployment rate since May 2009, Pantheon Macroeconomics officials stated;
‘Lower joblessness in Spain, Italy and Portugal were the key drivers of the headline decline in EZ unemployment last month. The advance data in Germany suggest that next month’s EZ report will show a further [unemployment] decline.
New Zealand Dollar demand has dropped strongly today, partly from a pessimistic analysis of the nation’s current problems.
Pinpointing the issues to be fixed by the next NZ government, the New Zealand Initiative highlighted an inaccessible housing market, among other hurdles;
‘The property ladder, which once allowed New Zealanders in their 20’s to own a home, has lost its bottom rungs. Our recommendations for restoring New Zealand’s housing affordability are simple but require political courage. After a decade of rampant housing inflation, restoring housing affordability must be a top priority for the Government’.
Looking ahead for sources of Euro movement, Tuesday will bring retail sales figures for the currency bloc. A rise is expected on the month and the year in February, which may further current EUR NZD gains.
More support could come from Wednesday’s Eurozone services and composite PMIs, which are both predicted to have risen in March.
A potential threat to continued EUR NZD advances this week will be European Central Bank (ECB) President Mario Draghi, who is due to speak on Tuesday and Thursday.
If the influential ECB policymaker comments on monetary policy and adopts a dovish stance, the Euro could shed its recently acquired gains and slide against the New Zealand Dollar.
On another week of limited NZ data, the New Zealand Dollar is expected to be shifted first by the NZIER business confidence score.
Following this will be the high-impact Global Dairy Trade price index on Tuesday. Given how sporadic dairy price movements have been recently, the next movement could be a drop in price, which would likely weaken NZD.
The other big NZ news will be Wednesday’s Business NZ PMI for March, which previously posted 55.2.
Current Interbank EUR NZD Exchange Rates
At the time of writing, the Euro to New Zealand Dollar (EUR NZD) exchange rate was trading at 1.52 and the New Zealand Dollar to Euro (NZD EUR) exchange rate was trading at 0.65.