As an earthquake briefly disrupted business in Wellington and China published mixed bag of economic data the New Zealand Dollar slid against peers like the ‘Aussie’ and Euro.
The ‘Kiwi’ edged lower against its major peers as China’s annual GDP came in at 7.7 per cent in the fourth quarter, down from 7.8 per cent in the third quarter.
The pace of industrial production in China also slowed by more-than-anticipated, falling from 10.0 per cent in November to 9.7 per cent in December rather than the 9.8 per cent expected.
Retail sales increased by 13.6 per cent in December, year-on-year, down from a gain of 13.7 per cent the prior month and in line with economists’ forecasts.
Although last week’s slightly disappointing German growth figures and Eurozone construction output report put pressure on the Euro, the common currency was able to advance on the New Zealand Dollar as German producer prices edged up unexpectedly.
The ‘Kiwi’ is likely to experience notable movement later today as New Zealand’s inflation figures are published.
The data is expected to show that domestic consumer prices advanced by 1.5 per cent in the final quarter of 2014 (YoY) after dipping 0.1 per cent quarter-on-quarter.
In the words of market strategist Imre Speizer; ‘We might see a slowdown in house sales and weak headline quarterly CPI numbers against a backdrop of a broadly rising US Dollar. It would be an environment to see Kiwi/US Dollar selling.’
The REINZ house price index, which was published during Australasian trading, also piled pressure on the ‘Kiwi’ and saw it extend declines against the Euro. The figures showed a 1.0 per cent MoM decline in house prices and a 1.1 per cent annual decline in New Zealand’s home sales.
If today’s New Zealand inflation data comes in at the estimated levels the ‘Kiwi’ could fall further against the Euro.
Tomorrow’s ZEW economic sentiment reports for the Eurozone and its largest economy are also likely to reveal improved confidence, potentially boosting the Euro.
EUR/NZD Forecast
After taking upcoming data into account the EUR/NZD pairing is forecast to push higher as the week progresses. Further influential economic reports for New Zealand will be in short supply from tomorrow so Eurozone news is likely to drive movement.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3553,
Euro,,British Pound,0.8242 ,
Euro,,Australian Dollar,1.5390 ,
Euro,,New Zealand Dollar,1.6471 ,
Euro,,Canadian Dollar,1.4838 ,
[/table]
