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EUR NZD Exchange Rate Up 0.7% ahead of Key ECB Policy Meeting

The Euro has been clearly dominant against the New Zealand Dollar today, making gains thanks to rising trader confidence in the single currency.

  • EUR NZD trades up at 1.6522 – NZD EUR rate slides to 0.6050
  • Euro advances on PMI figures – Falling German orders fail to dent EUR demand
  • New Zealand Dollar slides on election worries – Polls put Labour and Nationals neck-and-neck
  • Further EUR NZD gains possible on GDP data – Forecasts positive for NZ sales stats

The Euro has not been consistently strong against the New Zealand Dollar this week, having dropped sharply over Tuesday afternoon to a low of 1.6415.

Euro Bolstered by Higher PMI Stats

Although the Euro fluctuated against the New Zealand Dollar late on Tuesday, the pairing has since seen an advance thanks to positive reactions to yesterday’s news.

Tuesday brought data about Eurozone PMI readings in August, which showed a consistent level of overall growth in August.

This has prompted some economists to predict that Eurozone GDP growth for the third quarter will rise, potentially with there being more room for expansion in Q4 as well.

Today’s Eurozone news has essentially been negative by comparison, with German factory orders falling and Eurozone retail activity slowing.

New Zealand Dollar Tumbles as Election Polls Point to Close Race

With the Euro advancing steadily after recent PMI results, the New Zealand Dollar has failed to keep pace due to growing concerns about this month’s general election.

Since Jacinda Ardern became leader of the Labour Party, there has reportedly been a surge of ‘Jacindamania’, which has pushed the party up in the polls. This has put Labour in close contention with the currently governing National Party, turning the election into a close-fought race.

Commenting on the turnaround in outlook has been University of Otago law Professor Andrew Geddis;

‘In the last two elections, it’s been relatively clear that the governing party would be the National Party. [Now,] we might finally have a real election’.

The development of a ‘one-horse race’ into a tight contest has gradually devalued the New Zealand Dollar, due to the possibility of a completely different type of national leadership in the future.

Euro to New Zealand Dollar Outlook: Are Further Gains ahead on ECB Policy Meeting?

The Euro’s current winning streak against the New Zealand Dollar may continue tomorrow morning, when Eurozone-wide GDP results will be released. Estimates are for Q2 GDP to be revised up on both the year and the quarter, which could reinforce notions that the Eurozone still has room to grow in Q3.

The real high-impact news will come on the afternoon, however, when the European Central Bank (ECB) holds its policy meeting for the month. ECB officials are not expected to suggest higher interest rates, but may instead hint at a wind down of the ECB’s extensive quantitative easing balance sheet.

Supporting this outlook has been Deutsche Bank CEO John Cryan, who has stated that;

‘The era of cheap money in Europe should come to an end, despite the strong Euro. [Because of QE,] we are now seeing signs of bubbles in more and more parts of the capital market’.

If ECB President Mario Draghi does confirm these suspicions and announce that QE is being wound down then the Euro could rally against the New Zealand Dollar.

Upcoming NZ news will be less high-impact, consisting of Thursday night’s manufacturing sales figure. On the month, sales are tipped to rise by 1.5%; assuming that the Euro rallies earlier in the day, higher manufacturing sales may trigger a slight NZD EUR exchange rate recovery.

Current Interbank EUR NZD Exchange Rates

At the time of writing, the Euro to New Zealand Dollar (EUR NZD) exchange rate was trading at 1.6522 and the New Zealand Dollar to Euro (NZD EUR) exchange rate was trading at 0.6050.