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Euro New Zealand Dollar (EUR/NZD) Exchange Rate Muted Ahead of Further US-China Trade Talks

Euro New Zealand Dollar (EUR/NZD) Exchange Rate Flat as Traders’ Risk Appetite Remains Fragile

The Euro New Zealand Dollar (EUR/NZD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of NZ$1.7017.

The New Zealand Dollar remained muted on Thursday ahead of further face-to-face trade talks between the US and China.

Risk sentiment remained fragile, as US President Donald Trump said China ‘broke the deal’.

During a campaign rally in Florida the President stated that if they are unable to reach a deal, there was ‘nothing wrong with taking in more than $100bn a year.’

Meanwhile, Beijing have responded stating:

‘The escalation of trade friction is not in the interests of the people of the two countries and the people of the world.

‘The Chinese side deeply regrets that if the US tariff measures are implemented, China will have to take necessary countermeasures.’

New Zealand Dollar (NZD) Muted as RBNZ Slash Interest Rates to All-Time Low

On Wednesday the Reserve Bank of New Zealand (RBNZ) cut interest rates to an all-time low of 1.5%.

Disappointing inflation and a weakening job market caused the RBNZ to slash interest rates from 1.75%.

In a speech on Thursday, RBNZ Governor Adrian Orr stated that slowing economic growth was the reason for the cut.

However, it has been suggested that this may not be the last time the central bank cuts interest rates this year.

Commenting on this possibility, Bun Udy, Economist at Capital Economics said:

‘Subdued economic growth and a softening labour market means that today’s interest rate cut by the RBNZ will be repeated before the year is out.

‘An acceleration in GDP growth in the first quarter may stave off another rate cut for the next few months, but as unemployment rises and growth remains subdued in the second half of the year, we think the bank will cut rates to 1.25% in November.’

Euro (EUR) Flat despite Surprise Rise in German Industrial Production

On Wednesday, German industrial production rose by a higher-than-forecast 0.5% in March.

The increase was aided by rising construction and consumer goods construction.

However, the Economy Ministry warned that the outlook continued to remain subdued.

In a statement, the Economy Ministry said:

‘The business climate in the manufacturing sector became dimmer. Therefore a subdued industrial situation in the coming months is still to be expected.’

This likely dampened sentiment in the single currency, leaving the pairing muted on Thursday.

Euro New Zealand Dollar Outlook: Will the EUR/NZD Exchange Rate Slide as Risk-Appetite Increases?

Looking ahead to the start of tomorrow’s Asian session, the New Zealand Dollar (NZD) could rise against the Euro (EUR) following the release of the NZ electronic card retail sales.

If April’s card sales jump higher-than-forecast the ‘Kiwi’ could receive an upswing of support.

Meanwhile, the continuation of face-to-face trade talks between the US and China could buoy the New Zealand Dollar.

If reports suggest that trade discussions are progressing well risk appetite could increase and the Euro New Zealand Dollar (EUR/NZD) exchange rate could slide.