Euro to New Zealand Dollar (EUR/NZD) Exchange Rate Softens as ‘Kiwi’ Remains Strong
The Euro is currently trading down in the currency market against the New Zealand Dollar at 1.5452, following a strong period for the ‘Kiwi’ and fears over the Eurozone’s recovery.
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After last week shook the Eurozone with the Portugese Bank, Banco Espirito Santo, failing to meet debt payments, this week has seen the International Monetary Fund (IMF) warn that the Eurozone recovery is fragile; and its recovery could be damaged long term if any more setbacks appear within the near future.
The IMF wrote: ‘With limited policy space in the near term, further negative shocks- either domestic or external- could sour financial market sentiment, halt the recovery, and push the economy into lower inflation and even deflation.’
Conversely the credit rating agency Fitch have confirmed New Zealand’s AA rating, upgrading the country from ‘stable’ to ‘positive’. Furthermore, New Zealand have increased interest rates three times in 2014, and with the ‘Kiwi’ proving popular in the currency market, further speculation as to the prospect of an interest rate rise in the near future is prominent.
Strategist for Westpac, Imre Speizer, stated: ‘The question is whether he’s [Graeme Wheeler, the Reserve Bank of New Zealand’s governor] going to pause for one meeting or two- the data has been a bit negative compared to the Reserve Bank forecasts, so it’s more of a likelihood for two meetings. Given the “Kiwi’s” getting to heady heights, but we’re not going to run away too much from here.’
The ‘Kiwi’ is currently trading at 0.8790 against the US Dollar in anticipation of the US Federal Reserve’s chairwoman, Janet Yellen, making her Semi-Annual Testimony to the Senate Committee this afternoon.
Whilst the ‘Kiwi’ is trading strongly in the currency market against other major peers, President for the European Central Bank Mario Draghi has stated that a strong Euro is hindering and possibly endangering a Eurozone recovery.
Draghi commented: ‘Certainly, the appreciation that took place since mid-2012 had an impact on price stability. In the present context, an appreciated exchange rate is a risk to the sustainability of the recovery.’
New Zealand Dollar exchange rates likely to remain bullish
Late Tuesday will see the release of New Zealand Consumer Prices Index, which is only forecast to rise by 0.4% Year on Year in the second quarter.
Meanwhile House Price and Job Advertisement data will be published on Wednesday whilst the Eurozone will publish Trade Balance figures.
In the EUR/NZD currency pairing the New Zealand Dollar is likely to remain bullish in the near future, as the Euro is shaken by Portuguese missing debt payments and warnings from the IMF.