- EUR NZD Falls – Euro weakened by strong US Dollar.
- Eurozone CPI Rises – Upbeat data helps Euro recover.
- New Zealand Earthquake Reawakens Policy Fears –RBNZ might cut rates further.
- Draghi to Speak at Finance Week – Investors will look for any indication that ECB monetary easing will be extended.
The EUR NZD exchange rate dropped by around a cent overnight, bringing an end to the Euro’s (EUR) attempts to rally from Tuesday’s lows as the single currency suffered under the weight of a defiant US Dollar (USD).
Euro New Zealand Dollar (EUR NZD) Weakened By Strong US Dollar (USD)
The Euro New Zealand Dollar (EUR NZD) exchange rate continued sliding last night as the single currency’s status as one half of EUR USD -the most traded currency pairing in financial markets- caused it to decline. The US Dollar continues pressuring the Euro after Donald Trump’s surprise win in the US presidential elections.
The ‘Greenback’s’ rise is being attributed to a perception that Trump will pursue more aggressive fiscal policy and is backed up by strong growth in the US economy in recent weeks.
The US Dollar has also been strengthened by rising bets that the Federal Reserve will raise interest rates in December as analysts now believe that the chances of a rate hike are over 90%.
Euro (EUR) Begins Recovering after CPI Data
Euro (EUR) exchange rates were able to recover some of their loses this morning after the Eurozone consumer price index climbed from 0.4% to 0.5% in October, as predicted. While the figures were not overwhelming positive, the continued growth will help alleviate worries that the European Central Bank (ECB) may seek to extend its quantitative easing programme past March 2017.
Markets fear that the Bank may be planning to continue its QE programme if the Eurozone economy doesn’t show signs of significant growth between now and March, after ECB President Mario Draghi didn’t rule out additional financial stimulus at the Central Bank’s last interest rate meeting.
New Zealand Dollar (NZD) May fall if RBNZ Cuts Rates after Earthquake
The New Zealand Dollar could lose some momentum as investors begin to speculate whether the Reserve Bank of New Zealand will cut interest rates in response to the recent earthquakes as it did in 2011, although Philip Borkin, senior economist at ANZ, is confident that a cut would be unnecessary as he said;
‘Solid economic momentum into this event should provide some resilience, and with the fiscal accounts in improved shape, there is plenty of leeway for the Government to support any rebuild effort.’
While analysts seem confident that a rate cut is not necessary at this time, the extent of the damage is still being accessed and could easily force the Bank’s hand if the cost is higher than first predicted.
EUR NZD Exchange Rate Forecast: Draghi to Speak at Euro Finance Week Tomorrow
Draghi’s speech at the end of the Euro Finance Week in Frankfurt could provide some catalyst for movement in the EUR NZD exchange rate tomorrow. Investors will be focusing on whether the ECB President mentions the future of the Bank’s QE programme, with any indication of it being extended likely to cause the Euro to tumble.
Meanwhile, with only a few low impact ecostats set to be released tomorrow, markets may look to next week when the Eurozone is due to release its latest manufacturing and services PMI reports as their continued growth would bode well for the single currency.
Current Interbank Exchange Rates
At the time of writing the EUR/NZD exchange rate was trending around 1.51 and the NZD/EUR exchange rate was trending around 0.66.