The Euro to New Zealand Dollar (EUR/NZD) exchange rate has improved on the afternoon of 24th April, rising by 0.6%.
This appreciation may be down to hopes that French President Emmanuel Macron could make a breakthrough with his US counterpart.
Mr Macron has met President Trump in Washington for a state visit, which could lead to international policy agreements.
The most pressing issues at present are potential US disagreement with the Iran nuclear deal, as well as a potential rejoining of the Paris Agreement.
(First published 24th April, 2018)
Weaker New Zealand Dollar Enables EUR/NZD Exchange Rate Rise amid Gloomy Growth Forecasts
Chris Williamson of data analysts IHS Markit has summarised the historic growth problems in the Eurozone, stating;
‘The Eurozone economy remained stuck in a lower gear in April, with business activity expanding at a rate unchanged on March, which had in turn been the slowest since the start of 2017’.
Slower growth could have negative knock-on effects for the whole Eurozone economy, which is why the Euro exchange rates have (mostly) declined today.
Falling German Confidence Stats Prevent EUR/NZD Exchange Rate Rally
Another factor limiting Euro to New Zealand Dollar (EUR/NZD) exchange rate gains today has been the release of disappointing Ifo confidence readings for Germany.
Covering perceptions of current conditions, expectations and the business climate in April, the figures have shown lower optimism levels across the board.
To make matters worse, the readings for March have also been substantially revised down from their previous estimates.
Highlighting the concerning implications of this data, Claus Vistesen of Pantheon Macroeconomics said;
‘It is fair to say that this is a soft headline, indicating that the German economy lost further momentum at the start of the second quarter’.
New Zealand Dollar to Euro (NZD/EUR) Exchange Rate Drops to 4-Month Low on Interest Rate Forecasts
The New Zealand Dollar’s (NZD) poor performance against the Euro (EUR) today comes along with significant losses against other regular currency peers.
For the most part, the NZD has dropped to a 3-4 month low against its regular peers, as uncertainty about future interest rates grips New Zealand Dollar traders.
The main concern is that while the US Federal Reserve is gearing up for a new-term interest rate hike, the Reserve Bank of New Zealand (RBNZ) is remaining cautious.
Current predictions are for the Fed to raise interest rates two or three more times in 2018, while the RBNZ is on track to leave rates frozen into 2019.
Euro to New Zealand Dollar Exchange Rate Forecast: Is EUR/NZD Volatility ahead on ECB Policy Meeting?
The Euro (EUR) to New Zealand Dollar (NZD) exchange rate could turn turbulent on 26th April, when the European Central Bank (ECB) holds a monetary policy meeting.
ECB officials will be gathering to discuss, among other things, any adjustments to interest rates or bond buying as part of quantitative easing (QE).
Both are issues that have a high potential to cause EUR/NZD exchange rate volatility, although current forecasts are for no major policy change.
The best hope for a Euro rally on the day is for European Central Bank (ECB) President Mario Draghi to hint at tightening monetary policy in the coming months.
Any EUR/NZD exchange rate gains may prove short-lived, however, if Friday’s Eurozone confidence readings show forecast-matching declines for April.
The only major NZ data out this week will be the trade balance reading on 26th April.
The current NZ$217m surplus is tipped to shrink to NZ$200m, which might weaken the NZD.