Euro (EUR) Exchange Rates Limited by Cooling German Business Sentiment
The Euro New Zealand Dollar (EUR/NZD) exchange rate held relatively steady on Thursday, though the Euro’s upward potential was slightly limited by cooling optimism amongst Germany’s businesses.
The Institute for Economic Research’s (IFO) business climate gauge dropped from 117.6 to 115.4 in February, missing the market forecast of 117.
This demonstrated that euphoria has cooled somewhat within Germany’s private sector, with firms overall less satisfied with their current situation due to three predominant factors; the lack of German governance, the possibility of a tougher trade stance from the United States and the recent chaos within the markets.
The score is, however, still quite high – and more evidence would need to be revealed before it could be taken as a sign of a fundamental shift within Germany’s economy.
Klaus Wohlrabe echoed this sentiment, stating:
‘I would not yet speak of a change in the underlying trend, the German economy is still doing very well, but some of the steam has been let off’.
New Zealand Predicts 1% GDP Growth from Fresh TPP Deal – NZD Exchange Rates Supported
New Zealand Dollar (NZD) exchange rates found support on Thursday as markets responded to news that the new Pacific partnership trade deal could yield up to a 1% increase in New Zealand’s annual GDP readings.
According to New Zealand’s Ministry of Foreign Affairs, the new deal could add up to 4 billion NZD a year, with the Ministry also stating that a failure to sign into the deal could mean ceding a large amount of ground to competitors.
This is, however, entirely dependent on all of the 11 nations involved agreeing, or exiting the deal, and whilst Canada, Japan and Australia are expected to sign on in March, it will likely be a significant amount of time before the deal is ultimately ratified.
Nonetheless, this news largely kept the ‘Kiwi’ Dollar afloat, with today’s fall in January’s credit card spending figures (annual 6.2% to 4.6%) seeming to have very little effect on EUR/NZD.
EUR/NZD Exchange Rate Forecast: Volatility Ahead on Eurozone Inflation Readings
The Euro New Zealand Dollar (EUR/NZD) exchange rate could come under pressure tomorrow when markets respond to the bloc’s January consumer price index (CPI) readings.
These readings will be all the more pertinent after today’s reveal of the European Central Bank’s (ECB) meeting minutes, with bank policymakers still in no hurry to adjust policy due to inflation still not moving decisively towards target levels.
Indeed, markets are currently expecting a dip in the annual reading from 1.4% to 1.3%, with a massive contraction in the monthly reading from 0.4% to -0.9%.
If this occurs then it will only cement the sentiment of the central bank, potentially leaving monetary policy adjustments on hold for the foreseeable future.