The Euro (EUR) started on the back foot against the New Zealand Dollar (NZD) this morning as markets await Emmanuel Macron first moves as French president today.
The new president, freshly inaugurated on Sunday, is expected to spend his first day appointing a new Prime Minister. His choice could prove crucial ahead of June’s parliamentary elections, where his La République En Marche party is seeking to gain a majority to help push through Macron’s proposed economic reforms.
Reports suggest that Macron’s top candidate for the position is Édouard Philippe, the mayor of Le Havre and although not a member of En Marche, Macron hopes that appointing the Republican will help to gain some bi-partisan support for his policies.
Macron is also set to travel to Germany to meet German Chancellor Angela Merkel later today with the Pro-EU president seeking possible reforms for the Eurozone, whilst Merkel is expected to welcome Macron’s promise to reform France’s public spending and labour market.
EUR NZD was also weakened by the release of Greece’s latest GDP data this morning as figures showed that the Greek economy contracted again in the first quarter, shrinking 0.1%.
This is the second consecutive contraction for the beleaguered nation after its economy shrank 1.5% in the last three months of 2016, putting Greece back into a recession and placing pressure on the single currency.
Meanwhile the New Zealand Dollar was strengthened this morning by the announcement of a ‘modern Silk Road’ as Chinese president Xi Jinping outlined his Belt and Road initiative.
The plan, which will see China and its partners invest $900bn into an ambitious infrastructure programme designed to stretch the entire Eurasian continent, is hoped by supporters to herald a new ‘golden age’ of globalisation.
NZD investors hope that it will improve New Zealand’s trade opportunities, allowing its exports to reach markets quicker and easier and providing a major boon for the commodity-correlated ‘Kiwi’.
The New Zealand Dollar was also strengthened overnight by an uptick in domestic retail sales as they unexpectedly surged from 0.9% to 1.5% in the first quarter, the sharpest rise in sales since Q2 2016.
The jump was largely attributed to a rise in sales of cars and parts and, food and drink and consumer electronics.
Looking ahead, the EUR NZD exchange rate may tumble with the release of the Eurozone’s latest GDP figures tomorrow as annualised figures are expected to soften from 1.8% to 1.7%.
However, an upbeat ZEW Economic Survey from Germany could prevent the Euro from weakening if sentiment rises from 19.5 to 22 as analysts expect.
Meanwhile, the New Zealand Dollar may advance further tomorrow if prices continue to rise at the Global Dairy Auction. However, after rising 3.6% at the most recent auction there are doubts that markets can sustain any further price rises.
Current Interbank Exchange Rates
At the time of writing the EUR NZD exchange rate was trending around 1.5865 and the NZD EUR exchange rate was trending around 0.6302.