The New Zealand dollar gained against the euro yesterday subsequent to the release of better-than-anticipated CPI (consumer price inflation) statistics for the September 2022 quarter. The upbeat inflation data is expected to encourage the Reserve Bank of New Zealand to announce a steep hike in cash rates. This expectation kept the New Zealand dollar bullish against the euro yesterday. Overall, the EUR/NZD pair declined from a high of 1.7400 to a low of 1.7260 in the last 24 hours.
According to Statistics New Zealand, the country’s CPI (consumer price index) grew by 2.20% q-o-q in the September 2022 quarter, succeeding an increase of 1.70% in the preceding quarter, and pleased economists who were expecting inflation to rise at a slower rate of 1.50%. The better-than-anticipated New Zealand inflation rate at the end of the third quarter will encourage the Reserve Bank of New Zealand (RBNZ) to hike rates again at the upcoming policy meeting. Between October 2021 and September 2022, the RBNZ lifted the interest rate from a historically low level of 0.25% to 3.50%.
The increase was led by a 4.10% rise in food prices. Specifically, fruit and vegetables increased by 17%, while grocery foods grew by 2.20%. Housing and household utilities grew by 2.30%. Transport rose by 1.70%.
On a year-on-year basis, the country’s CPI surged 7.20% in the September 2022 quarter.
Housing and household utilities grew by 8.70% y-o-y in the September 2022 quarter. In particular, homeownership surged by 17% while actual rentals rose by 4.60%.
Transport rose by 12%, aided by a 16% rise in private transport supplies. Food prices grew by 8%. In particular, fruit and vegetables surged 14%.
According to the Italian National Institute of Statistics (Istat), the country’s trade deficit widened to €9.57 billion in August, from €0.46 billion in the prior month, and worse than forecasts of a €0.50 billion deficit anticipated by economists.
While exports fell by 0.50% for EU countries in August, imports grew by 6.40%. Likewise, exports declined by 6.90% for non-EU countries while imports rose by 2.20%.
On a year-over-year basis, exports surged 24.80% in August. Imports jumped 59.10% in the same period. Outgoing flows rose by 27.60% and 22.10% for EU countries and non-EU countries, respectively.
Import prices rose by 3% m-o-m in August. On a y-o-y basis, import prices surged 23 in August 2022.
According to the data published by the Centre for European Economic Research, the German ZEW economic sentiment index improved to -59.20 in October, from -61.90 in September, and pleased economists who were expecting a further deterioration in the index to -65.70. A negative reading indicates pessimism, while a positive reading indicates optimism about the economic outlook over the next six months.
The ZEW economic sentiment for the Eurozone improved to -59.70 in October, from -60.70 in the prior month. Economists had anticipated a further decline in the index to 61.20.
The robust New Zealand inflation data and anticipation of another steep rate hike are expected to keep the EUR/NZD pair range-bound with a slight bearish bias in the near term.
The EUR/NZD pair is falling after facing resistance at 1.7490. The following major support is projected at around 1.6930. Also, the pair is trading below its 50-day moving average while the MACD indicator is showing a negative reading. Consequently, we expect the EUR/NZD pair to continue in a downtrend for the next few trading sessions.
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.
