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Hopes for ECB Action Push Euro to New Zealand Dollar (EUR/NZD) Exchange Rate Higher

EUR/NZD Exchange Rate Rises on Trader Hopes for June ECB Meeting

The Euro (EUR) has steadily risen against the New Zealand Dollar (NZD) today, thanks to continued optimism about June’s European Central Bank (ECB) meeting.

This has made €1 worth about NZ$1.6775, which puts the EUR/NZD exchange rate at its best level in just over a week.

Although not assured by any means, there have been signs that the ECB could decide to tighten monetary policy in 2018, leading to an eventual interest rate hike.

ECB policymaker Peter Praet spoke on Wednesday and suggested that the bank might change policy in the future:

‘Signals showing the convergence of inflation toward our aim have been improving, and both the underlying strength in the Euro area economy and the fact that such strength is increasingly affecting wage formation supports our confidence that inflation will reach a level … close to 2% over the medium term.

‘Next week, the Governing Council will have to assess whether progress so far has been sufficient to warrant a gradual unwinding of [quantitative easing].’

Quantitative easing (QE) is the ECB’s bond-buying program, which is designed to stimulate the Eurozone economy with debt and bond purchases.

If the measure is wound down in the future, this could lead to the ECB committing to a Euro-boosting interest rate hike before 2019.

New Zealand Dollar to Euro (NZD/EUR) Exchange Rate Declines after Dairy Price Drop

The New Zealand Dollar (NZD) has posted losses against the Euro (EUR) today, in addition to declining against other regular currency peers.

This poor performance is partly down to dairy-related news, which has lowered confidence among NZD traders.

Tuesday’s Global Dairy Trade price index showed a decline in global dairy prices, from 1.9% for the previous reading to a drop of -1.3%.

This came despite some forecasts that prices would rise as the NZ government took steps to cull cattle following an outbreak of bovine disease in the country.

Falling dairy prices are bad news for New Zealand’s dairy farmers as well as its dairy exporters, so the New Zealand Dollar has been devalued by the news.

Euro to New Zealand Dollar Forecast: Will German Data Drag EUR/NZD Exchange Rate Down?

The Euro (EUR) is at risk of falling against the New Zealand Dollar (NZD) before the weekend, depending on how German economic data prints on Friday.

The morning will bring a trade balance reading for April, along with a measure of industrial production during the same month.

Economists are forecasting a reduction of Germany’s trade surplus, from €25.2bn to €18.7bn.

The nation would still have an enviably large trading surplus after such a result, but the EUR/NZD exchange rate might still be weakened by the news.

German industrial production stats could also devalue the Euro, should they show a forecast-matching slowdown in output from 1% to 0.3%.

Looking further ahead, the next economic data from New Zealand will be Sunday’s manufacturing sales reading for Q1 2018.

The year-on-year figure is predicted to show a slowdown in the sector, which could lead to New Zealand Dollar to Euro (NZD/EUR) exchange rate losses early next week.