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Euro to New Zealand Dollar Fluctuates as Investors React to Underwhelming Eurozone Data

  • Euro New Zealand Dollar Drops to 1.54 – Lowest levels since April
  • New Zealand Dollar Boosted by US News – USD investors seek high-yielding NZD
  • NZD Update: New Zealand Growth on Thursday – NZ growth unexpectedly slows
  • EUR Forecast: Inflation Data Ahead – Eurozone inflation due Friday

Eurozone Data Fails to Support Euro New Zealand Dollar Rate

The Euro to New Zealand Dollar exchange rate failed to recover on Thursday despite the day’s underwhelming New Zealand growth data.

Investors continued to sell the Euro from its highs in profit-taking and the week’s Eurozone data hasn’t improved the shared currency’s outlook at all.

Instead, the Eurozone’s disappointing French inflation data on Thursday kept pressure on the shared currency and EUR NZD continued to trend below the week’s opening levels.

Friday will see the publication of the Eurozone’s final overall May inflation results. If they fall short of expectations too, EUR NZD could end the week near its lowest levels since April.

[Previously updated 12:45 BST 15/06/2017]

The New Zealand Dollar weakened on Thursday as New Zealand’s Q1 Gross Domestic Product (GDP) results failed to meet expectations.

Analysts had projected New Zealand’s economy to remain at 2.7% year-on-year in Q1 and rise from 0.4% to 0.7% quarter-on-quarter.

However, the results came in at 2.5% year-on-year and 0.5% quarter-on-quarter. As a result, investors seeking higher yields looked to the Australian Dollar instead of the ‘Kiwi’.

The Euro has failed to fully benefit from NZD weakness however, as French inflation stats published on Thursday also failed to meet expectations. As a result, EUR NZD remains below the week’s opening levels in the region of 1.54 at the time of writing.

[Published 16:13 BST 14/06/2017]

Despite decent Eurozone data and mixed New Zealand data, the Euro to New Zealand Dollar exchange rate has slipped this week as investors seeking high yields find appeal in the risky ‘Kiwi’.

EUR NZD has been weakening since it hit a yearly high in late-May. So far this week, the pair opened at the level of 1.5523 and on Wednesday hit a low of 1.5413. This was the pair’s lowest level since late April.

Euro (EUR) Fails to Benefit from Solid Domestic Data

Despite an optimistic political and economic outlook in the Eurozone in recent weeks, the Euro has continued to weaken against an increasingly strong New Zealand Dollar.

This week’s Eurozone data has thus far not been influential enough to improve the Eurozone outlook further and as a result has failed to keep EUR NZD buoyed.

Tuesday saw the publication of ZEW’s June economic sentiment surveys from Germany and the overall Eurozone. Germany’s current conditions figure beat expectations of 85, rising from 83.9 to 88, while the Eurozone economic sentiment index rose from 35.1 to 37.7 beating the forecast 37.2.

However, Germany’s June economic sentiment index unexpectedly dropped. The figure was expected to come in at around 21.5 but instead fell from 20.6 to 18.6.

Wednesday’s data was more solid. While Germany’s inflation rate slowed in May as expected, the Eurozone bloc’s April industrial production and Q1 employment change figures beat expectations.

Employment was forecast to come in at 0.3% quarter-on-quarter but improved to 0.4%. The year-on-year result improved to 1.5% and the previous figure was revised higher from 1.1% to 1.4%.

Analysts were generally optimistic about the Eurozone’s April industrial production results but pointed out that there was still uncertainty. According to Bert Colijn from ING Bank;

‘Growth in production of goods dropped in April though and capital goods production even declined. While the monthly data for production is volatile, this does show that industry continues to struggle on its way up.

The outlook for industry does remain bright though as businesses have been indicating that backlogs of work are increasing as new orders are coming in at a faster pace. This will likely translate into accelerating growth over the course of Q2.’

New Zealand Dollar (NZD) Sees Higher Demand Amid USD Weakness

Underwhelming New Zealand data had little lasting effect on the New Zealand Dollar on Wednesday. The day’s New Zealand’s Q1 current account update failed to meet expectations of NZ$0.92b, printing at NZ$0.24b.

Investors instead bought the risky ‘Kiwi’ due to a drop in 2017 Federal Reserve interest rate hike bets.

While investors still widely expect the Fed will hike US interest rates in this week’s monetary policy decision, concerns grew on Wednesday that the Fed would play down the possibility of a third rate hike this year.

This is because May’s US inflation results came in well below expectations on Wednesday, increasing concerns that the US economy may not be able to support another interest rate hike soon.

As New Zealand has one of the highest interest rate among developed nations, the New Zealand Dollar is often popular for its high yields. This is especially true in times when Fed rate hike bets drop.

Wednesday saw the publication of New Zealand’s Q1 current account update which failed to meet expectations of NZ$0.92b, printing at NZ$0.24b.

Euro New Zealand Dollar Forecast: NZ Growth Data in Focus

The New Zealand Dollar looks to see busier movement towards the end of the week

Thursday’s Asian session will see the antipodean currency reacting to Wednesday’s Federal Reserve news. If the Fed indicates that it is downgrading its US interest rate forecast, the high-yielding ‘Kiwi’ is likely to strengthen.

New Zealand’s Q1 Gross Domestic Product (GDP) results will also be published on Thursday. Analysts expect the year-on-year figure will remain at around 2.7% with the quarter-on-quarter rate rising from 0.4% to 0.7%.

However, some analysts have suggested growth could slow. If it does, the Euro to New Zealand Dollar exchange rate will advance towards the end of the week.

Thursday and Friday’s Eurozone data could be influential if it surprises, but analysts expect French, Italian and Eurozone inflation stats to meet projections and slow in May.

EUR NZD Interbank Rate

At the time of writing this article, the Euro to New Zealand Dollar exchange rate trended in the region of 1.5440. The New Zealand Dollar to Euro exchange rate traded at around 0.6473.