- EUR NZD Climbs to 1.6791 – NZD EUR Tumbles to 0.6069
- Labour’s Jacinda Ardern Named PM – Market Faith in the ‘Kiwi’ Slumps
- Spain Announces that it will Declare Direct Rule Over Catalonia – Euro Unperturbed
EUR NZD Climbs as Jacinda Ardern Secures Place as New Zealand PM
The Euro New Zealand Dollar exchange rate soared this morning on news that New Zealand’s Labour leader Jacinda Ardern will be forming the nation’s next government with the support of Winston Peters and New Zealand First.
‘This is an exciting day,’ Ardern stated. ‘We aspire to be a government for all New Zealanders and one that will seize the opportunity to build a fairer, better New Zealand’.
This news marked the end of almost a decade of National leadership, sparking a great deal of concern amongst the markets as the Labour party is generally considered to be a potential threat to the nation’s economy (especially though the promotion of significant restrictions on trade).
Whilst this news did end over a month of uncertainty, it has also fostered even more – with markets left unsure of how the NZ economy will respond to new leadership.
Peters has since stated that new policy announcements will come from Arden, though he did shed light on plans to redraft the Reserve Bank of New Zealand’s (RBNZ) central bank mandate and that stricter immigration policy would also follow.
In addition, he agreed with Labour on plans to build thousands of ‘affordable homes’.
The Euro New Zealand Dollar exchange rate has now risen some 1.82% as a result.
Spain Announces Hard Stance on Catalonia Independence – Euro Unfazed
The situation in Spain has continued to escalate this morning on news that Madrid has made clear its intentions –Spain will push ahead with suspending Catalan autonomy on Saturday.
This news comes after Catalan leader Carles Puigdemont threatened to unilaterally declare independence if Madrid continued to refuse negotiations.
Puigdemont sent a letter on Thursday to Spanish Prime Minister Mariano Rajoy, in which he also condemned the arrest of two prominent members of the independence movement who have been denied bail.
‘…despite all our efforts and our desire for dialogue, the fact that the only reply we have been given is that autonomy will be suspended suggests that you do not understand the problem and do not wish to talk. If the government persists in hindering dialogue and continues with its repression, the Catalan parliament could, if it deems appropriate, proceed to vote on the formal declaration of independence’.
If neither side budges by Saturday then Spain will initiate article 155; the means by which the government can take full control of an autonomous state. If this occurs then the Euro could come under significant pressure, as it would signal further unrest within the Eurozone.
EUR NZD Outlook: Volatility Ahead on Catalan Strife
Whilst the Euro is currently soaring against the New Zealand Dollar, this could potentially change by Saturday.
Lacking any further notable Eurozone data releases this week markets will now be increasingly turning to the situation in Catalonia – a state of affairs that could have severe ramifications for the strength of the single currency.
As noted previously; if Spain triggers article 155 then the Euro could tumble.
Another eventuality, however, is that events will simply be delayed once again to allow for more negotiations. If this occurs then the EUR will likely continue to capitalise on the weakness of the ‘Kiwi’ Dollar.