The Euro (EUR) soared to its best level since March against the New Zealand Dollar (NZD) and edged higher against the Pound (GBP) on Monday after German Inflation data easing pressure on the European Central Bank to introduce a quantitative easing programme.
The ‘Kiwi’ went into free-fall against all of its peers on Monday after the Reserve Bank of New Zealand revealed that it had sold large amounts of New Zealand Dollars in August, increasing expectations that the bank may choose to make more market interventions in an attempt to weaken the currency further.
Also weighing heavily upon the ‘Kiwi’ were comments made by NZ Prime Minister John Key.
Key said that he would be happy for the currency to fall further in order to aid the nation’s exporters and offset the impacts of falling commodity prices.
As the session progressed, the single currency came under pressure as economic data showed that sentiment across the 18-member currency bloc fell to its lowest level in 10-months in September.
According to the European Union Commissions monthly sentiment index, sentiment across the region fell by 0.7 points from 100.6 to a reading of 99.9. Economists had been forecasting for a drop to 100. The decline in sentiment was being blamed upon the standoff between Russia and the EU over the crisis in Ukraine.
‘Current heightened geopolitical tensions particularly related to Russia/Ukraine are weighing down on confidence across the Eurozone, reinforcing still challenging conditions in many countries Furthermore, the Euro is still stronger than Eurozone would ideally like even though it has weakened appreciably in recent weeks. Meanwhile, the persistent struggles of the French and Italian economies through 2014 so far reinforce concerns over their underlying competitiveness and growth potential,’ said Howard Archer, chief economist at IHS.
Despite the negative sentiment data, the Euro managed to make gains later in the session as investors chose to focus on the release of the latest German inflation data.
According to the German Federal Statistics Office, inflation in the Eurozone’s largest economy remained unchanged at 0.8%, a figure that was better than economist expectations for a slight dip to 0.7%.
Economists are now turning their attention to Tuesday’s Eurozone inflation data. The European Union’s statistics agency Eurostat is set to release data that many analysts expect a decline from 0.4% to 0.3% in September, which would be a five-year low and significantly below the ECB’s target of just below 2%.
The rest of the week promises to be a busy one for the Euro due to a wealth of economic data releases due. Of most importance will be Tuesday’s inflation figures and Thursday’s ECB policy meeting. Other data also due to be released include Retail Sales, Unemployment and PPI.
Euro Exchange Rate News:
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