Ahead of the release of IFO business climate/current assessment/expectations reports for Germany the Euro softened ever so slightly against the New Zealand Dollar as the South Pacific currency was supported by domestic news.
New Zealand’s performance of services index advanced from a positively revised 56.4 to 57.5 in December, moving further away from the 50 mark separating growth from contraction and up from 52.5 in the same period of the previous year.
This eighth month of service sector expansion adds to the case for the Reserve Bank of New Zealand increasing interest rates in the near future.
In a statement issued with the figures Business New Zealand economist Craig Ebert stated; ‘It suggests ongoing robust growth in the sector. December’s PSI harboured detail that suggested a pick-up in production is, in fact, gathering momentum’.
The data supported the New Zealand Dollar in a comparatively quiet trading session, helping it achieve a fresh eight-year high against its Australian counterpart.
‘Kiwi’ gains were limited as investors turned from higher risk assets in the wake of last week’s displays of emerging-market weaknesses while public holidays prevented trading in Auckland and Australia.
As the day progresses the Euro could recover losses against the New Zealand Dollar and post widespread gains thanks to upbeat reports for the Eurozone’s largest economy.
The German IFO current assessment measure advanced from 111.6 to 112.4 in January, as expected by economists.
However, both the business expectations and business climate indexes exceeded expectations, producing readings of 108.9 and 110.6 respectively.
The measures were forecast to come in at 108.0 and 110.0.
In the days ahead additional EUR/NZD movement could be inspired by German consumer confidence data, the Reserve Bank of New Zealand’s rate decision and German unemployment/inflation figures.
If the RBNZ hints at the prospect of a rate increase the Euro/New Zealand Dollar exchange rate is liable to experience considerable volatility.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,British Pound,0.8282 ,
Euro,,Australian Dollar,1.5715 ,
Euro,,New Zealand Dollar,1.6618 ,