- Euro New Zealand Dollar Climbs to 1.5978 – New Zealand Dollar Euro Slides to 0.6257
- New Zealand’s Dairy Price Index Drops 1.6% – Demand for the ‘Kiwi’ Dollar Falls
- New Zealand Employment Falls Short – Number of Employed Drops as Working-age Population Increases
- Eurozone GDP Growth Hits 0.6% – Euro Remains Steady
The Euro to New Zealand Dollar exchange rate has continued climbing today after being bolstered on two fronts: New Zealand’s latest dairy price index dropping and the nation’s latest employment figures falling short of forecasts.
New Zealand’s overall dairy price index demonstrated a 1.6% drop at the latest auction amid concerns of oversupply. This was the third decline in four auctions.
The final decided price came in at $US3343.
Whilst dairy products as a whole fell, whole milk powder demonstrated a 1.3% rise, hitting $US3155 per tonne.
Susan Kilsby, AgriHQ dairy analyst, stated:
‘The market struggled to absorb the extra volume of product available on GDT which does not bode well for the coming months when offer volumes continue to lift in line with the seasonal lift in New Zealand’s milk supply’.
Understandably, the dairy-correlated ‘Kiwi’ Dollar reacted negatively to the result – with the positive bump in whole milk being too insignificant to prevent the currency’s fall.
New Zealand Dollar (NZD) Struggles after Poor Jobs Figures
The New Zealand Dollar was also hammered by the latest domestic employment figures, which came up short of expectations.
Statistics New Zealand released its second quarter employment figures during the Australasian session. The stats revealed that after some six quarters of employment growth, the number of people in work surprisingly dropped by -0.2% – roughly 4000 people. Additionally, the participation rate fell from 70.6% to 70.0%, a drop predominantly caused by the increasing number of working-age people within the antipodean nation.
The decline in the participation rate did contribute to the unemployment rate dropping to 4.8% however – the lowest it’s been since December 2008.
In regards to labour costs, the recent bump in minimum wages shoved the labour cost index up to 1.7% year-on-year from 1.6%.
The combined force of yesterday’s dairy price index and this morning’s employment figures weighed heavily on the ‘Kiwi’ Dollar, causing it to trade continuously lower against the Euro.
Eurozone GDP Accelerates, Euro (EUR) Bolstered
The Euro has continued to enjoy support as a result of yesterday’s Eurozone GDP figures, which demonstrated a 0.6% growth rate in Q2 2017.
This news helped relieve some anxieties regarding the state of the Eurozone economy, particularly with Spain Italy and Greece continuing to be hounded by unemployment, financial bailout reliance and borderline economic collapse.
Unfortunately for the Euro, however, whilst this growth rate is better than previously, the Eurozone’s inflation level remains drastically below the European Central Bank’s (ECB) target levels, driving down rate hike bets for the future September ECB meeting.
EUR NZD Forecast: Eurozone Data Expected to be Mixed
With that being mostly it in terms of significant New Zealand data releases this week, further movement for the EUR/NZD exchange rate will predominantly result from releases on the Eurozone’s calendar.
The most significant Euro data releases this week include German factory orders, Eurozone retail sales and Eurozone PMIs.
On Friday, German factory orders for June are currently forecast to significantly increase year-on-year from 3.7% to 4.4%, whilst retail sales are expected to demonstrate a small dip from 2.6% to 2.5% on Thursday.
These mixed reports could leave the Euro fluctuating.
