The Euro to New Zealand Dollar (EUR/NZD) exchange rate touched its lowest level ever early on Monday before firming.
The Euro to New Zealand Dollar (EUR/NZD) exchange rate fell to a session low of 1.4289
The ‘Kiwi’ surged to its highest ever level against the single currency in the Asian session as the European Central Bank’s quantitative easing programme continued to put heavy pressure on the Euro and as domestic data offered support.
The BNZ-Business NZ performance of services index released today showed continuing growth in February. The index fell 2.2 points to 55.6 last month, with all five sub-indexes above the 50 level that separates contraction from expansion.
Despite the record high, the New Zealand currency is forecast to soften as the week progresses as market attention turns to the upcoming US Federal Reserve policy meeting and domestic data out of New Zealand.
The ‘Kiwi’ will likely come under pressure midweek from this week’s GlobalDairyTrade dairy auction, which is expected to show that dairy prices softened on the back of last week’s poisoning scare and a slowdown in demand from China.
‘This morning we got above 70.00 Euro cents and our expectation is the Euro will continue to decline over 2015. Our forecasts expect Kiwi-Euro to get to 73 to 74 by the end of the year. It’s a EUR/USD story or more specifically a Euro versus everything else story,’ said Sam Tuck, senior forex strategist at ANZ New Zealand.
Eurozone Data Could Support on Tuesday
As the week progresses the ‘Kiwi’ could resume it’s upwards trend if Gross Domestic Product data released on Wednesday comes in as forecast. Economists are forecasting that the New Zealand economy expanded by 3.3% on an annual basis in the fourth quarter of last year, an improvement on the previous figure of 3.2%.
On a quarter on quarter basis, the nation’s economy is forecast to have strengthened by 0.7%, a slightly slower pace than the 1% seen in the previous quarter.
The Euro could make more gains on Tuesday if Eurozone inflation and economic sentiment data come in positively.
Signs that the region’s economy is finally showing signs of improvement will lend support to the currency.
Concerns over Greece however are likely to restrain such support.