NZ dollar jumps to two-month high vs euro

Published: Fri 16 Oct 2015 08:39 AM
NZ dollar jumps to two-month high vs euro as ECB seen adding more stimulus
By Tina Morrison
Oct. 16 (BusinessDesk) - The New Zealand dollar rose to a two-month high against the euro after a European Central Bank official suggested more stimulus measures were likely for the region.
The kiwi touched 60.38 euro cents, and was trading at 60.27 cents at 8am in Wellington, from 59.41 cents at 5pm yesterday. The local currency advanced to 68.63 US cents from 68.21 cents yesterday as the latest US economic data stoked speculation the Federal Reserve won’t lift interest rates soon.
The euro, shared by 19 members of the European Union, tumbled after ECB policymaker Ewald Nowotny said the bank must search for more ways to stimulate the Eurozone economy, prompting speculation the ECB may widen the scope of its current programme. The ECB meets next week in Malta although it isn't scheduled to update its quarterly forecasts until December.
"The euro tumbled against all it major trading partners in the aftermath of the remarks causing particularly sharp spikes in Aussie and kiwi as EUR/AUD and EUR/NZD trades were unwound," Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, said in a note. "While the market remains dubious about any Fed tightening action this year, the focus may shift on ECB next week and if (ECB president Mario) Draghi and company decide to rev up the QE programme the euro could come under further selling pressure over the near term horizon."
In New Zealand today, the focus is on third-quarter inflation data. The consumers price index probably slowed to 0.2 percent from a 0.4 percent pace in the second quarter, according to a Reuters poll. Economists will likely firm up their expectations for interest rates following the data, ahead of the next Reserve Bank review on Oct. 29.
The New Zealand dollar advanced to 93.50 Australian cents from 92.78 cents yesterday ahead of the release of the Reserve Bank of Australia's six monthly financial stability review today.
The local currency gained to 44.30 British pence from 44.08 pence yesterday, rose to 81.50 yen from 81.20 yen, and increased to 4.3552 yuan from 4.3261 yuan. The trade-weighted index advanced to 73.08 from 72.61 yesterday.
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