THE EURO/NEW ZEALAND DOLLAR
Learn more about the Euro and New Zealand Dollar, and find out if trading the pair is right for you. Discover the facts surrounding this financial asset, its history, market conditions and much more. Finally, see which traders should benefit from adding these currencies to their portfolios.
WHO SHOULD CONSIDER TRADING THE EURO/NEW ZEALAND DOLLAR?
Opportunity Hunters: Traders who are searching for new opportunities, can take the EURNZD into consideration.
Day Traders: Those in search of a quick snatch and grab opportunity should seriously consider the EUR NZD.
WHAT MAKES THE EURO/NEW ZEALAND DOLLAR SO APPEALING?
The Euro is the currency of the world’s largest economic bloc, the European Union. With 20 trillion US Dollars in GDP, Europe is still an important economic destination for many traders. New Zealand is one of the world’s biggest success stories over the last decade. The small island nation had a GDP of 180 billion US Dollars and 3.5% growth in 2017.
WHAT DO I NEED TO KNOW ABOUT THE EURO AND NEW ZEALAND DOLLAR?
The Euro was founded in 1999, becoming the official currency of 19 member states. It enjoyed reasonable success until the economic crisis of 2008. Since then, it has lost part of its lustre, as the ailing European Union attempts to recover some of its former glory.
The New Zealand Dollar, also known as the Kiwi, was founded in 1967. It replaced the Pound, which was the national currency of the country up until that date. New Zealand used the Pound because it was a former British colony, like much of the English speaking world. In the past, the NZD was pegged against the Pound and the US Dollar.
HOW HAVE THE TWO CURRENCIES PERFORMED AGAINST EACH OTHER SINCE 2008?
Until 2009, the Euro was outpacing the New Zealand Dollar by a value of 2 to 1 or higher. But since the crisis in the Eurozone, the Kiwi has gained significant ground on the single currency. For the next several years it would hover at around 1.6 to 1.8. However, recent trends show the Euro gaining some steam, closing in on the 2 to 1 value of 2009. A quick review of a ten year graph shows very little erratic movement between the two currencies.
WHAT ARE THE FACTORS THAT MOVE THE EURNZD VALUE?
While many traders are aware of the extraordinary influence the European Central Bank has over the behaviour of the Euro, it is important to also review the fiscal policy of individual member states. Rebellious members can cause turmoil in the markets that the ECB and the European Parliament are not always able to prevent.
For the New Zealand Dollar, the factors are more traditional reports. Three of the most important reports are the balance of trade, quarterly inflation rate and the purchasing managers index. (PMI)
WHAT ARE SOME OF THE POSITIVE REASONS TO TRADE THE EURO/NEW ZEALAND DOLLAR?
One of the most important reasons to trade currencies is liquidity. With over five trillion US Dollars worth of currency traded every day, there is always a buyer and seller available.
Both currencies and economies are considered stable. In addition, both Europe and New Zealand as countries are stable when compared to other parts of the world.
Transparency and availability are the hallmarks of Europe and New Zealand. Traders can be assured that they will receive all the information they need to make informed decisions.
WHAT YOU MAY WANT TO CONSIDER
Tracking reports and important news stories is not always easy when dealing with currencies in different time zones. It is imperative to make an effort to stay tuned to what has already happened prior to the start of your trading day.
The European Union is a massive and sometimes disorganised political body. Always remember that even unofficial statements by high ranking officials can create volatility and opportunity in the markets.
Many beginners in currency trading do not possess knowledge or understanding of the New Zealand market. It is critical to research in advance before adding the New Zealand Dollar to your portfolio.
HOW DO I TRADE THE EUR/NZD?
The recommended method is to contact an online broker who can provide you with a trading platform that you can access on your computer. eToro is an example of such a broker.
Open a foreign currency account at your bank or financial institution. This is the more traditional and less flexible method. It has been losing popularity over the last several years.
Withdraw money from your bank and convert it to your currency of choice at an exchange. This physical trading is not recommended due to high commissions and safety concerns.
IS TRADING THE EURO/NEW ZEALAND DOLLAR RIGHT FOR ME?
This question is often asked by many beginner traders who are unsure about their first steps in online trading. The reality is that there is no right or wrong answer. It entirely depends on your level of confidence and commitment. If you are ready to take on the risks in order to reap the rewards and are willing to constantly learn new trading techniques, then you are probably ready to start trading currencies online.
*This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.
*Past performance is not an indication of future results. All trading carries risk. Only risk capital you’re prepared to lose.