Since the Reserve Bank of New Zealand became the first developed-nation central bank to increase interest rates, the ‘Kiwi’ has been receiving underlying support.
However, during Australasian trading the Euro, US Dollar and Pound were able to advance on the New Zealand Dollar as investors digested some disappointing domestic inflation figures.
Statistics New Zealand revealed that in the first quarter of 2014 New Zealand’s annual inflation rate dipped to 1.5 per cent, down from 1.6 per cent in the fourth quarter of last year.
Acceleration to 1.7 per cent had been anticipated.
As this data reduces the odds of the RBNZ continuing with the steady raising of interest rates, the appeal of the ‘Kiwi’ lessened and the commodity-driven currency declined.
The Euro was also able to strengthen against the New Zealand Dollar as the price of New Zealand’s main export (diary) dropped on a fifth consecutive occasion.
Bloomberg News quoted Dominick Stephens as saying; ‘Lower-than-expected inflation will obviously reduce the urgency for the Reserve Bank to hike. Low inflation plus the high exchange rate and falling dairy prices, taken together, have placed a cloud over our forecast for a July hike’.
China’s GDP data was also released overnight and growth in the world’s second largest economy slowed by slightly less-than-expected in the first quarter of 2014.
As China is one of New Zealand’s major trading partners this news did lend the nation’s Dollar a little support.
Furthermore, while the overnight developments weakened the ‘Kiwi’ the Euro’s gains against its South Pacific rival were trimmed as disappointing Eurozone inflation data added to the case for the European Central Bank introducing stimulus to defend against deflation risks.
With the weekend fast approaching further EUR/NZD fluctuations could be triggered by New Zealand’s consumer confidence data and the Eurozone’s current account figures.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3839 ,
Euro,,British Pound,0.8243 ,
Euro,,Australian Dollar,1.4812 ,
Euro,,New Zealand Dollar,1.6105 ,
Euro,,Canadian Dollar,1.5224 ,