‘Kiwi’ (NZD) on Dovish Trend Today ahead of Domestic Unemployment Data and Dairy Auction
Sentiment towards the New Zealand Dollar (NZD) has remained muted on Tuesday morning, with traders exercising increasing caution ahead of the day’s domestic Unemployment Rate figure and GlobalDairyTrade auction. This has helped to keep the EUR/NZD exchange rate on a more positive footing today, in spite of weakening Euro (EUR) demand, trending in the region of 1.6331.
Unexpected improvement in Eurozone Manufacturing PMIs has bolstered the EUR/NZD exchange rate to extend gains against the soft ‘Kiwi’ (NZD).
New Zealand Dollar (NZD) Exchange Rate Bolstered by Declining Odds of 2015 Fed Interest Rate Hike
Although the ‘Kiwi’ (NZD) remained weighed down by the seemingly increasing odds of an imminent interest rate hike from the Fed following an unexpectedly hawkish statement from policymakers, the South Pacific currency was buoyed by a raft of decidedly softer US data towards the end of the week. While the third quarter US GDP showed a greater slowing of economic growth than anticipated, the September Personal Consumption Expenditure Core also indicated that inflationary pressure had failed to rise in the nation. Offering a less optimistic picture of the domestic economy this naturally led to a decrease in the odds of a 2015 interest rate hike, prompting a round of risk appetite that strongly benefitted the New Zealand Dollar.
Despite a relatively strong showing of Eurozone data on Friday the Euro to New Zealand Dollar (EUR/NZD) exchange rate saw a decided slump ahead of the weekend. Though the domestic Unemployment Rate slid to a three-year low and the October Consumer Price Index showed improvement on the previous month’s negative inflation reading, the single currency failed to derive any particular strength from its negative correlation with the US Dollar (USD) amid market demand for higher-risk assets.
Unexpectedly Strong German Manufacturing PMI put Euro (EUR) on Uptrend Today, ‘Kiwi’ (NZD) Sentiment Muted
Buoyed by the publication of a stronger-than-expected Chinese Caixin Manufacturing PMI, which strengthened from 47.2 to 48.3 on the month, the ‘Kiwi’ did not ultimately hold onto its gains for long this morning. Traders remain concerned over the health of the world’s second largest economy, as this improvement is not enough to lift domestic manufacturing output out of a state of contraction with global slowdown fears persisting.
Faith in the Euro has been bolstered this morning, on the other hand, with the publication of the finalised October Manufacturing PMIs for the currency union. Manufacturing output in Germany unexpectedly printed at a stronger level than the provisional report, clocking in at 52.1 rather than 51.6, while the Italian figure also significantly bettered forecast. Shoring up pundit confidence in the outlook of the common currency, this set the EUR/NZD pairing on a bullish uptrend today.
EUR/NZD Exchange Rate Forecast: Upcoming Dairy Price Gauge should Provoke New Zealand Dollar Volatility
As tomorrow’s third quarter New Zealand Unemployment Rate is expected to show a slight rise, from 5.9% to 6.0%, the ‘Kiwi’ is likely to remain in a slump. If the domestic economy demonstrates particular weakness this could see the EUR/NZD conversion rate continue to extend its gains. The next GlobalDairyTrade auction on Tuesday night is also set to provoke some volatility for the New Zealand Dollar, especially if dairy prices drop once again.
Further Eurozone PMIs are set for publication on Wednesday, although the impact of these is expected to be relatively muted thanks to the less fresh nature of the figures and no particular changes are anticipated on the provisional numbers.
Current EUR, NZD Exchange Rates
At time of writing, the Euro to New Zealand Dollar (EUR/NZD) exchange rate was gaining bullishly in the region of 1.6334, while the New Zealand Dollar to Euro (NZD/EUR) pairing was on a downtrend around 0.6119.