NZ dollar pops above 79 US cents, pulled up by stronger euro

NZ dollar pops above 79 US cents, pulled along by stronger euro

By Tina Morrison

Oct. 3 (BusinessDesk) - The New Zealand dollar was pulled upwards by a strengthening euro after the European Central Bank failed to detail the size of its upcoming bond purchase plan, curbing bets it would expand its balance sheet enough to weaken the currency.

The kiwi edged up to 78.98 US cents at 8am in Wellington, from 78.84 cents at 5pm yesterday. It touched a high of 79.22 US cents. The trade-weighted index advanced to 76.85 from 76.72 yesterday.

The euro jumped against the US dollar after ECB president Mario Draghi failed to provide further details of the stimulus programme following the central bank's meeting yesterday. That disappointed investors wanting to know how much the ECB would commit to asset purchases, prompting them to unwind bets that the euro would decline.

"The ECB didn't give anything definitive in their statement so they missed the chance to weaken the euro and convince the market that they had a solid plan," said OMF senior dealer, foreign exchange, Martin Rudings, who speculated the ECB may be facing opposition to its plan from Germany, the region's largest economy.

"That has allowed the euro to go up and the US dollar to weaken against the euro. Kiwi and Aussie are in the same boat so they have just stayed elevated," Rudings said.

He expects the kiwi to trade between 78.40 US cents and 79.25 cents today.

The currency market is likely to be quiet today as investors eschew taking positions ahead of the key US non-farm payrolls release, he said.

Rudings said he expects the report will show the US added more than 250,000 jobs last month, ahead of the market expectation for 215,000. A report yesterday showed initial claims for state unemployment benefits in the US dropped 8,000 to a seasonally adjusted 287,000 in the week ended Sept 27, better than the 297,000 expected in a Reuters poll of economists.

"If that all comes about, then the US dollar should strengthen," Rudings said.

The New Zealand dollar advanced to 89.69 Australian cents from 89.47 cents yesterday ahead of a report measuring activity in the services sector.

The kiwi was little changed at 62.31 euro cents from 62.28 cents and at 85.61 yen from 85.66 yen. It gained to 48.92 British pence from 48.56 pence yesterday.

(BusinessDesk)

© Scoop Media