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High Hopes for ECB Interest Rate Hike Trigger Euro to New Zealand Dollar Exchange Rate Rally
Published: 12 Jan at 1 PM Tags: Euro Exchange Rate, Dollar Exchange Rate, Australian Dollar Exchange Rate, New Zealand Dollar Exchange Rate, Currency Exchange, Euro Crisis, Exchange Rates, Inflation,
Euro to New Zealand Dollar Exchange Rate (EUR/NZD) Firms after ECB Minutes
The Euro has risen by 0.8% against the New Zealand Dollar today, in addition to a 0.9% advance against the Australian Dollar.
The Euro’s present strength comes from a European Central Bank (ECB) meeting on Thursday, in which the bank said that;
‘The language pertaining to various dimensions of the monetary policy stance and forward guidance could be revisited early in the coming year’.
This has meant that the ECB may be thinking about finally winding down its extensive quantitative easing program, which could lead to trader-coveted interest rate hikes further ahead.
The ECB’s hint at this course of action has been tentative in the extreme, but remains a significant factor behind the latest Euro appreciation.
Unfortunately for Euro traders, the next Eurozone data could see the EUR/NZD exchange rate decline because of pessimism about future ECB monetary policy.
Eurozone inflation rate figures will come out on 17th January and are tipped to show a year-on-year slowdown in December.
Lower inflation lessens the chances of ECB monetary policy tightening in the future, so could lead to a negative trader reaction and a Euro to New Zealand Dollar exchange rate decline.
New Zealand Dollar to Euro Rally Possible on Sliding US Inflation Stats
The New Zealand Dollar has plummeted by -0.8% against the Euro today, as traders steer clear of the high-risk currency.
Given that the latest NZ news was positive, today’s low New Zealand Dollar demand is mainly because of upcoming events in the US.
These supportive NZ ecostats concerned building permits granted in November; permit numbers saw a sharp recovery from a -10.4% slowdown to 10.8% growth.
The NZD/EUR exchange rate could rise sharply in the near-term, if imminent US inflation rate data matches with forecasts.
The NZD has been has been an undesirable currency recently, but this could change if the US inflation rate is reported to have fallen in December 2017.
Expectations are for a slowdown in year-on-year US inflation from 2.2% to 2.1%, while a month-on-month reduction from 0.4% to 0.2% has also been projected.
Such slowdowns would mean less pressure on the Federal Reserve, the US central bank, to consider an interest rate hike this year.
Traders are looking for favourable conditions in the US to facilitate at least three interest rate hikes in 2018, so slowing inflation would go against this outcome.
All of this means that the US Dollar could fall in value on the inflation rate data, which may conversely raise demand for higher-risk currencies like the New Zealand Dollar.
The Euro has risen by 0.8% against the New Zealand Dollar today, in addition to a 0.9% advance against the Australian Dollar.
The Euro’s present strength comes from a European Central Bank (ECB) meeting on Thursday, in which the bank said that;
‘The language pertaining to various dimensions of the monetary policy stance and forward guidance could be revisited early in the coming year’.
This has meant that the ECB may be thinking about finally winding down its extensive quantitative easing program, which could lead to trader-coveted interest rate hikes further ahead.
The ECB’s hint at this course of action has been tentative in the extreme, but remains a significant factor behind the latest Euro appreciation.
Unfortunately for Euro traders, the next Eurozone data could see the EUR/NZD exchange rate decline because of pessimism about future ECB monetary policy.
Eurozone inflation rate figures will come out on 17th January and are tipped to show a year-on-year slowdown in December.
Lower inflation lessens the chances of ECB monetary policy tightening in the future, so could lead to a negative trader reaction and a Euro to New Zealand Dollar exchange rate decline.
New Zealand Dollar to Euro Rally Possible on Sliding US Inflation Stats
The New Zealand Dollar has plummeted by -0.8% against the Euro today, as traders steer clear of the high-risk currency.
Given that the latest NZ news was positive, today’s low New Zealand Dollar demand is mainly because of upcoming events in the US.
These supportive NZ ecostats concerned building permits granted in November; permit numbers saw a sharp recovery from a -10.4% slowdown to 10.8% growth.
The NZD/EUR exchange rate could rise sharply in the near-term, if imminent US inflation rate data matches with forecasts.
The NZD has been has been an undesirable currency recently, but this could change if the US inflation rate is reported to have fallen in December 2017.
Expectations are for a slowdown in year-on-year US inflation from 2.2% to 2.1%, while a month-on-month reduction from 0.4% to 0.2% has also been projected.
Such slowdowns would mean less pressure on the Federal Reserve, the US central bank, to consider an interest rate hike this year.
Traders are looking for favourable conditions in the US to facilitate at least three interest rate hikes in 2018, so slowing inflation would go against this outcome.
All of this means that the US Dollar could fall in value on the inflation rate data, which may conversely raise demand for higher-risk currencies like the New Zealand Dollar.
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Source: moneytransfer.co.uk