The Euro to New Zealand Dollar (EUR/NZD), Euro to Russian Ruble (EUR/RUB) and Euro to Indian Rupee (EUR/INR) exchange rates were trending lower in the first half of Wednesday’s European session, while the Euro to Chinese Yuan (EUR/CNY) and Euro to Swiss Franc (EUR/CHF) exchange rates advanced.
The New Zealand Dollar suffered losses on Tuesday with the release of the Reserve Bank of New Zealand’s (RBNZ) Two-Year Inflation Expectation. The forecast for Kiwi consumer prices shrank from 2.1% to 1.8%. As a result, some investors readjusted their views for RBNZ interest rate action.
ANZ Bank New Zealand foreign exchange strategist Sam Tuck commented: ‘People are hyper-sensitive to Reserve Bank and are expecting them to follow the same path the same as everyone else who’s tried to raise rates after the global financial crisis.’
Federal Reserve Dovish Speech Impacts EUR, NZD, INR Exchange Rates
However, the New Zealand Dollar enjoyed an upswing when US Federal Reserve Chairwoman Janet Yellen suggested that interest rate hikes could still be a way off.
Tuck continued : ‘She was actually saying there is no forward guidance and we will be data dependent, which meant the bears could read what they want and the bulls could read what they want.’
Meanwhile, the Russian Ruble has been sensitive this week after credit ratings agencies downgraded Russia’s sovereign rating to ‘junk’ status. January 26th saw Standard and Poor’s downgrade its rating, followed by Moody’s this week.
Over the past year, Russia’s economy has been teetering of the precipice of recession and the sovereign downgrade by Moody’s saw the agency speculate that Russia would enter a ‘deep recession’ this year.
Economist Neil Shearing stated: ‘The Moody’s downgrade may have dampened confidence further. It’s symbolic in the sense that it shows just how far Russia’s fundamentals have deteriorated over the past year.’
The Russian Ruble to Euro (RUB/EUR) exchange rate rebounded slightly in Wednesday’s early session as Greek tensions continue to weigh on the single currency.
Meanwhile, the Swiss Franc was offered little support on Wednesday when the UBS Consumption Indicator showed weaker private consumption in January, even before the Swiss National Bank (SNB) removed the cap between the Euro and Swiss Franc (EUR/CHF) exchange rate.
The UBS report read: ‘The UBS Consumption indicator fell to 1.24 points in January from 1.42 due to a lower number of new car registrations. The improved mood of retailers and consumers prior to abandonment of the exchange rate floor prevented a sharper drop.’
The Chinese Yuan recorded gains against the Euro (CNY/EUR) after HSBC’s Chinese Manufacturing Purchasing Managers Index (PMI) was released. The index resided at 49.7 in January and economists had forecast a fall to 49.5 in the following month. However, the actual figure counteracted negative predictions by rising to 50.1 in February.
The upswing in Chinese manufacturing offers the New Zealand and Australian Dollars (AUD) some support as China is both Trans Tasman nations’ largest trading partner.
However, the Euro was able to claw back some losses against the Chinese Yuan (EUR/CNY) in Wednesday’s European session.
The Indian Rupee managed to climb to a two-week high versus the US Dollar (INR/USD) on Wednesday after Yellen’s dovish speech on Tuesday.
Currency trader Navin Raghuvanshi stated: ‘The Rupee is reacting to Yellen’s comments, which implied that US rate increases are still probably some time away. There’s also some expectation of an investment-friendly budget, which is aiding sentiment.’
Euro Exchange Rate Forecast: EUR/NZD, EUR/CHF, EUR/RUB, EUR/INR, EUR/CNY
The Euro exchange rate is sensitive to the ongoing Greek negotiations and although Eurogroup heads approved Greece’s reform proposal, both the International Monetary Fund (IMF) and the European Central Bank (ECB) have issued warnings about certain aspects of the agreement.
IMF Managing Director Christine Lagarde commented: ‘In quite a few areas… including perhaps the most important ones [the Greek proposal] is not conveying clear enough, assurances that the government intends to undertake the reforms.’
The Euro to New Zealand Dollar (EUR/NZD) exchange rate is trading in the region of 1.5033. The Euro to Swiss Franc (EUR/CHF) exchange rate resides at 1.0780. The Euro to Chinese Yuan (EUR/CNY) exchange rate is reaching 7.1178. The Euro to Russian Ruble (EUR/RUB) exchange rate hovers at 71.0675. The Euro to Indian Rupee (EUR/INR) exchange rate is trending in the region of 70.3960.