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Uncertain Eurozone Inflation Leads to EUR/NZD Exchange Rate Decline

On Wednesday afternoon, the Euro has made a clear advance against the New Zealand Dollar. The EUR/NZD exchange rate has risen by 0.7%, trading around 1.6509.

This follows a disappointing political development in New Zealand – NZ First Leader Winston Peters has given no clear indication of when he will announce the party he is forming a coalition with.

Peters last stated that he would make an announcement on Thursday afternoon, but this period of time is by no means set in stone. If this self-imposed deadline is similarly delayed, the New Zealand Dollar could fall further tomorrow.

(Last updated October 17th, 2017)

The Euro has made a small advance against the New Zealand Dollar on Tuesday afternoon, trading up at a rate of 1.6414.

The latest Euro-supporting update has been damaging news out of New Zealand.

While it was earlier expected that an NZ coalition announcement would come by the end of the week, NZ First leader Winston Peters has since removed this latest self-imposed deadline.

Peters has stated that the NZ First board has failed to agree on which party should be supported, which leaves growing uncertainty about who could be in the next government, and when we’ll know about it.

(First published October 17th, 2017)

The Euro has dropped against the New Zealand Dollar today, due to two notable setbacks in Eurozone economic readings.

  • EUR NZD rate slips to 1.6387 – NZD EUR trades up at 0.6100
  • Euro slides on inflation disappointment – Eurozone confidence slows
  • NZD rises on higher inflation stats – Coalition talks drag on
  • Is EUR volatility ahead on ECB speeches? – NZD volatility possible on dairy data

Monday saw the Euro slip against the New Zealand Dollar, opening trading at 1.6457 and closing in the region of 1.6416.

Euro Loses Ground on Minor Inflation Slowdown

The Euro has made a minor loss against the New Zealand Dollar today, following a pair of disappointing Eurozone data releases.

First up, the Eurozone-wide inflation rate figures showed an unexpected slowdown for the core annual reading in September.

The core measurement strips out volatile factors like fuel costs, so is seen as the more accurate reading. Lower inflation means reduced chances of the European Central Bank (ECB) considering an interest rate hike in the future.

The other negative news has been that Eurozone economic sentiment has fallen in October, when a rise had been forecast.

German economic sentiment has risen, but a worsening perception of current conditions has left the Euro flagging against more in-demand currencies.

New Zealand Dollar Trades Higher on Rising Inflation

The recent NZD appreciation has been caused by Monday night’s NZ inflation rate reports, which showed higher-than-expected inflation in Q3 on the quarter and the year.

While this has been fuel for the Reserve Bank of New Zealand (RBNZ) to consider an interest rate hike, economists believe the RBNZ will keep rates on hold for the foreseeable future.

In other news, talks to establish a majority coalition government have continued to drag on.

National Party leader Bill English has stated that there is still a wait ahead before the New Zealand First Party decides to govern with the Nationals or Labour. Speaking recently, English said;

‘[NZ First] won’t be looking at completed agreements because there are still a number of issues related to forming a government that have not yet been dealt with.

Look at it from NZ First’s point of view. They’re trying to secure policy gains when they’re in a position to do so because it’s a bit harder once you’re in government.

It was a way of testing whether the parties can get on, testing the relationships a bit and just seeing how they work together’.

Glut of ECB Speeches could Trigger Euro Turbulence

The next Eurozone data to watch out for will come on Wednesday, starting in the morning and continuing into the afternoon.

The news will be a wide range of speeches from European Central Bank (ECB) officials, starting off with potentially high-impact comments from Mario Draghi.

Draghi, the President of the ECB, will be speaking in Frankfurt and opening a conference on ‘Structural Reforms in the Euro Area’.

If Draghi’s comments (and the wider conference) consist of a positive outlook then the Euro could appreciate.

If policymakers think that there is drastic action needed to prevent an economic collapse, however, then the Euro may drop because of higher uncertainty.

The next NZ news will come out sooner, consisting of this afternoon’s Global Dairy Trade price index.

Measuring changes in global dairy prices, this previously declined by -2.4%. If it somehow rises by a significant amount, the New Zealand Dollar could advance noticably.

Current Interbank EUR NZD Exchange Rates

At the time of writing, the Euro to New Zealand Dollar (EUR NZD) exchange rate was trading at 1.6387 and the New Zealand Dollar to Euro (NZD EUR) exchange rate was trading at 0.6100.