The euro persisted in a range-bound state against the Kiwi dollar yesterday on the heels of the release of better-than-anticipated economic data from Europe and New Zealand. While the German PPI (producer price index) surpassed estimates in May, New Zealand’s services index improved in the same period. Overall, the EUR/NZD pair stayed range-bound between 1.6540 and 1.6650.
According to the German statistical agency Destatis, the country’s PPI increased 1.60% m-o-m in May, following a rise of 2.80% in the previous month and a notch higher than the 1.50% growth expected by analysts.
On a year-over-year basis, the German PPI surged 33.60% in May, representing the steepest rise so far. Energy prices skyrocketed 87% y-o-y in May 2022. On a m-o-m basis, energy prices increased 2.50% in May. In particular, the price of natural gas surged 148.1% y-o-y in May 2021. Industrial consumer prices jumped 210.70%. Electricity prices increased 90.40%. Also, prices of mineral oil products were up 55.80% y-o-y in May 2022. Similarly, prices of light heating oil surged 96%. The overall index, excluding energy, rose by 16.50% y-o-y in May 2022. On a m-o-m basis, the overall index, excluding energy, increased 1.20%.
Prices of intermediate goods rose by 25.10% y-o-y in May 2022. Metal prices grew by 38.10%. Likewise, prices of metallic steel and ferroalloys surged 51.80%. While the price of non-ferrous metals increased 24.80%, prices of reinforcement steel grew by 72.10%.
Fertilizers and nitrogen compounds increased 110.90% y-o-y in May 2022. Industrial gases recorded a price increase of 68.80%. Wooden containers posted price growth of 67.40%. While sawn timber prices increased 41.90%, prepared feeds for farm animals grew by 48.70%.
Prices of non-durable and durable consumer goods increased 14.70% and 9.40%, respectively. Capital goods recorded a price rise of 7.10%, reflecting the highest annual price rise since September 1974.
According to the data published by The BusinessNZ, the country’s Performance of Services Index (PSI) increased for the fourth consecutive month to 55.20 in May, from 52.20 in the prior month. The reading, which is the highest since June 2021, reflects an improvement in the services sector activity in New Zealand.
The sub-indexes New Orders/Business and Activity/Sales increased to 62 and 59.60, respectively. However, the employment index declined below 50 to 48.50. Likewise, the supplier deliveries index fell to 45. A reading below 50 indicates contraction and vice-versa.
Commenting on the data, BNZ Senior Economist Doug Steel pointed out, “[…] the overall outcome was the first above-average result since the outbreak of Delta in August last year.”
The better-than-anticipated economic data from both countries are expected to keep the EUR/NZD currency pair range-bound in the short term.
The historical price chart reveals that the EUR/NZD currency pair is decreasing after facing resistance at 1.6660. The next major support is predicted near 1.6470. Also, the pair is trading below its 50-day moving average, and the stochastics indicator is in the bearish zone. We are expecting the currency pair to continue in a downtrend in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
