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Euro New Zealand Dollar (EUR/NZD) Exchange Rate Muted as Eurozone Inflation Slows

EUR/NZD Exchange Rate Subdued Following Weak Eurozone CPI Figures

The Euro New Zealand Dollar (EUR/NZD) exchange rate is trading in a narrow range this morning in the wake of the Eurozone’s latest Consumer Price Index (CPI).

Euro (EUR) Exchange Rates Stall as Weak Inflation Dampens Sentiment

The Euro (EUR) is stuck treading water this morning as markets react to the Eurozone’s latest CPI figures.

According to data published by European Statistics agency, Eurostat, headline inflation slowed to 2% in November, down from 2.2% in October and missing expectations of a more modest decline to 2.1%.

The slump appeared to mostly driven by a sharp fall in oil prices this month, with US crude falling as low as $50 a barrel in recent weeks.

However even when stripping out volatile items like oil and food, core inflation was shown to have unexpectedly fell this month dipping from 1.1% to 1%.

The concern will now be whether this slowdown in inflation carries through to 2019, with headline inflation already resting at the bottom end of the European Central Bank’s (ECB) target range, further softness is likely to raise questions over whether the ECB will stick with its plans to hike interest rates after summer.

New Zealand Dollar (NZD) Steady as Markets Brace for Trump-Xi G20 Meeting

At the same time the New Zealand Dollar (NZD) is holding steady this morning as NZD investors await the outcome of the Trump-Xi dinner taking place on the side-lines of the G20 summit this weekend.

It’s hoped the meeting between US President Donald Trump and his Chinese counterpart Xi-Jinping will help to defuse trade tensions between the two countries.

However on the eve of the summit, in an interview with the Wall Street Journal, Trump appeared to dampen optimism of the trade dispute being resolved as he said that he still expected to push forward with the implication of higher tariffs on $200bn of Chinese goods in January.

Valerie Mercer-Blackman, senior economist at the Asia Development Bank also remained pessimistic on the chances of a breakthrough especially as the recent APEC failed to help diffuse tensions, as he explains:

‘I think unfortunately, the US and China remain quite far apart in the issues behind the trade conflict, so we are not too optimistic.

‘Failure to agree on the communique at the APEC meeting… also suggests that there is quite substantial distance between the two sides, and there doesn’t seem to be a specific proposal on the table yet to end the impasse.’

EUR/NZD Exchange Rate Forecast: Eurozone PMI Figures to Leave Pressure on the Euro?

Looking ahead to next week’s session, the Euro New Zealand Dollar (EUR/NZD) exchange rate may remain muted through the first half of the session, following the publication of the Eurozone’s latest PMI figures.

These are expected to confirm growth in the bloc’s private sector slowed to its worst pace since 2014 in November, likely reinforcing fears of a slowdown in the Eurozone.

Meanwhile in the absence of any notable domestic data movement in the New Zealand Dollar is likely to continue to be driven by market risk appetite, likely leading to a slump in the ‘Kiwi’ if the US-China trade dispute remains unresolved at the start of next week.