NZD/EUR to consolidate around 0.64 level - Westpac

NZD/EUR’s plunged last week in response to the hawkish comments from Draghi as Imre Speizer, research analyst at Westpac expects some consolidation this week around 0.64 for the cross.

Key Quotes

“Draghi detailed why both headline and core inflation were likely to rise towards the ECB’s near-2% target. He even made the case that “adjusting the parameters of its policy instruments” would not be tightening. Markets aren’t interested in such semantics and are scrambling to price in a more swift reduction in ECB stimulus.”

“The data highlights are German and EU inflation and survey data as well as German retail sales, factory orders and industrial production.”

“3 months ahead: European economic data is improving, witness sentiment surveys at six year highs. However, after easing recently, political tensions in the EU could still resurface, with Austria calling early elections in 4Q, and a chance of early elections in Italy. Adverse developments could push NZD/EUR beyond 0.66.”