Euro (EUR) Exchange Rate Forecast to Decline against the ‘Kiwi’ (NZD) ahead of Praet Speech
The Euro to New Zealand Dollar (EUR/NZD) exchange rate dived by around -1.6% on Wednesday afternoon.
Having surged significantly during the chaos of ‘Black Monday’, the common currency has since gradually depreciated. The Euro is still holding a comparative position of strength versus its major peers, however, which is partly the result of better-than-expected domestic data on Tuesday.
Later in Wednesday’s European session European Central Bank (ECB) Executive Board Member Peter Praet is due to make a speech in Mannheim. On Tuesday, ECB Vice President Vitor Constancio warned of the potential for the central bank to act if the inflation outlook remains concerning. Should Praet echo Constancio’s sentiment, the common currency should see losses extended. Once the market has settled from recent shocks, there is a high likelihood that the Euro will revert to bearish trade given the extent of policy divergence between the ECB and other major central banks.
The Euro to New Zealand Dollar (EUR/NZD) exchange rate is currently trending in the region of 1.7568.
New Zealand Dollar (NZD) Exchange Rate Forecast to Rally versus the Shared Currency (EUR) as Markets Readjust
During Tuesday’s European session commodity assets rallied as traders sought to readjust positions from the fallout of ‘Black Monday’. The New Zealand Dollar advanced significantly, although was still holding a comparatively weak position versus its major competitors. Aiding the ‘Kiwi’ (NZD) uptrend was a report from the Reserve Bank of New Zealand (RBNZ) which showed inflation expectations rose for the next two-years.
With commodity-correlated currencies still holding soft positions, traders are still buying into said assets despite rocky risk sentiment. The ‘Kiwi’ (NZD) rallied versus its major peers during the early stages of Wednesday’s European session despite less-than-ideal trade balance data from the preceding Australasian session. New Zealand’s Trade Deficit widened in July from -194 million New Zealand Dollars to -649 million; eclipsing the market projection of -600 million.
The Euro to New Zealand Dollar (EUR/NZD) exchange rate dropped to a low of 1.7515.
Euro to New Zealand Dollar (EUR/NZD) Exchange Rate Forecast to Extend Losses on Dovish ECB
Given that Constancio warned of potential ECB intervention, and with so much uncertainty regarding the fallout from China, Peter Praet is likely to make dovish comments during the forthcoming speech. This would see the Euro to New Zealand Dollar (EUR/NZD) exchange rate extend losses. Market readjustment will also play a major role in EUR/NZD exchange rate volatility.
With an absence of data pertaining to New Zealand on Thursday, ‘Kiwi’ movement will be subject to changes in market sentiment and commodity prices. European data is unlikely to have a significant impact given that traders are looking to adjust exchange rate levels to more appropriate positions.
The Euro to New Zealand Dollar (EUR/NZD) exchange rate climbed to a high of 1.7866 during Wednesday’s European session.