NZD/EUR: Corrective rebound persists - Westpac

NZD/EUR’s recent rebound could extend to 0.6000 - the Nov high, according to Imre Speizer, Research Analyst at Westpac.

Key Quotes

“ZEW surveys are now moderating, perhaps a sign that growth is likely to slow. The event calendar over the holiday period includes: EC Summit (22-23 March) Eurogroup meetings (22 Jan, 19 Feb, 12 March), and ECB (25 Jan & 8 Mar).”

“3 months ahead: Slack in the economy remains so that wage growth and core inflation have failed to make much progress. Merkel’s CDU/ CSU is struggling to form an effective coalition and may be reduced in effectiveness once any agreement is found. Italy is going to the polls on 4 Mar under new electoral rules which are likely to lead to a broad coalition. This backdrop should affirm ECB’s easy policy stance unless there is a surprise wage/inflation shock. Consequently, EUR is likely to struggle early in 2018, although could still outperform the NZD which will lose its “high-yielder” identity. NZD/EUR could gravitate lower towards 0.56.”