NZD/EUR: Minor bounce should be followed by further weakness to the 0.6200 area - Westpac

Imre Speizer, Research Analyst at Westpac, explains that the sharp bounce in the EUR post the French 1st round election results caused a sharp fall in NZD/EUR, but that has stalled and a minor bounce to the 0.6350 area should be followed by further weakness to the 0.6200 area during the weeks ahead.

Key Quotes

“Markets are comfortable with a Macron victory, but how fragmented the French Assembly will be after the June vote is the next political thorny issue for EU. In the interim, markets expect change in guidance from ECB, but low inflation and credit data suggest no change in policy into 2H’17.”

“The highlights of the event calendar this week are the French presidential 2nd ballot (7th May), 1Q GDP (3rd), final PMIs and EU retail sales (all 4th).”

“3 months ahead: Assuming a centrist win during the April/May Presidential election, NZD/EUR should resume the March decline during the months ahead to 0.6200 or lower.”