Poor Figures Reinforce Need for Additional Stimulus from ECB
The Eurozone Consumer Price Index figures have failed to meet the forecast levels, with the Core index falling -0.2% to 0.9% instead of remaining level at 1.1%. Members of the ECB had previously highlighted the Eurozone’s stubborn inflation as a factor that would affect the need for additional monetary stimulus.
Euro Fluctuates with Markets Uncertain Whether ECB Will Increase Stimulus or Cut Interest Rates
Part of the doubt that is currently weakening the Euro comes from the fact that experts are divided as to what path the European Central Bank (ECB) will decide to take in order to stimulate the economy. While some economists are anticipating a 10 basis point cut in the deposit rate, a Reuters poll predicts an increase in bond-buying to €75 billion.
The EUR/NZD exchange rate has slumped as a bullish New Zealand Dollar benefits from uncertainty surrounding the interest rate decisions of the US Federal Reserve and the European Central Bank. Positive Eurozone data is helping to slow the advance of the New Zealand Dollar, but the Euro is still down -0.6% against the ‘Kiwi’ (NZD).
EUR/NZD Exchange Rate Forecast: Eurozone Unemployment Rate Falls
Today’s Eurozone news has been mostly positive, with PMIs for Italian and German Manufacturing printing better-than-expected and Eurozone manufacturing holding steady at 52.8. Unemployment in both Germany and the Eurozone unexpectedly fell to 6.3% and 10.7% respectively, while the German Unemployment Change posted a larger-than-anticipated decline in joblessness of -13k.
The only negative news among the data was French Manufacturing PMI, which saw growth slow to 50.6. This is unlikely to have much of an impact, however, as economists had predicted that the Paris terrorist attacks carried out earlier in the month would have an impact upon the French economy.
While the positive data has given the Euro a small boost, the common currency is suffering from cool demand as traders overlook today’s data in order to focus on Thursday, when the European Central Bank (ECB) will make its decision on interest rates and monetary stimulus. President Mario Draghi has long been hinting at the need to take additional measures to boost the economy and both the currency and stock markets have slowed in anticipation.
The EUR/NZD exchange rate is currently trending in the region of 1.5930.
NZD/EUR Exchange Rate Forecast: New Zealand Dollar Benefits from Fed Rate Hike Uncertainty
The New Zealand Dollar is currently bullish against many of the major currencies, rising 0.5% against Pound Sterling (GBP), 0.6% against the Australian Dollar (AUD) and the Euro and 0.8% against the US Dollar (USD).
As a high-risk asset with the potential for greater yields, the ‘Kiwi’ has benefitted from trader caution ahead of interest rate decisions, not only from the ECB, but also the US Federal Open Market Committee (FOMC) meeting in the middle of December. With the potential of the ECB pushing the interest rate further into negative territory, focus has turned to high-risk currencies such as the New Zealand Dollar. The Australian Dollar, another high-yield asset, is also performing bullishly.
The NZD/EUR exchange rate is currently trading between 0.6234 and 0.6289.
EUR/NZD Exchange Rate Forecast: Diary Auction Could Reverse New Zealand Dollar Fortunes
The ‘Kiwi’ has been kept weak over the past month by falling diary prices. Weak demand for New Zealand’s main export has caused ripples throughout the economy and caused many to speculate that the Reserve Bank of New Zealand will need to cut interest rates in order to help stimulate the economy. However, dairy futures suggest that today’s auction could see prices rise again, which would further strengthen the New Zealand Dollar. A drop in prices will do a lot to undermine the ‘Kiwi’s strength.
The EUR/NZD exchange rate is currently trending between 1.5855 and 1.6026.