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NZ dollar extends slide vs euro on speculation ECB will tackle question of end to stimulus

Friday 8th June 2018

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The New Zealand dollar extended its decline against the euro to the lowest in almost two weeks amid speculation the European Central Bank will consider the end of its stimulus measures at a meeting next week. The euro rose to a three-week high against the greenback.

The kiwi dollar fell to 59.56 euro cents as at 8:30am in Wellington from 59.72 cents late yesterday. The kiwi slipped to 70.29 US cents from 70.45 cents yesterday and the trade-weighted index was at 73.51 from 73.58.

Speculation about the end to the ECB's massive bond-buying programme was stoked this week by comments from chief economist Peter Praet, who said the issue would be debated at next week's policy meeting. The ECB has pumped some 2.55 trillion euros into the regional economy through bond purchases in extraordinary measures aimed at reviving economic growth and inflation. The euro rose even after German factory orders for April unexpected dropped 2.5 percent against expectations of a 0.8 percent gain.

"The market continues to dwell on the implications of the ECB debating the end of QE at its meeting next week," said Miles Workman, an economist at ANZ Bank New Zealand, in a note. "Euro is benefiting and a near-term top in this cross has been achieved for now."

ANZ said the New Zealand dollar would find support at around 59.30 euro cents and run into resistance if it rose back as high as 60.20 cents.

With little economic data overnight, financial markets are looking ahead to the two-day Group of Seven leaders summit in Canada that starts on Friday, which some commentators have dubbed G-6 plus one because of the trade frictions drummed up by US President Donald Trump. At the same time, Trump has made concessions for Chinese firm ZTE Corp to allow it to keep trading in the US provided it pays a fine of US$1.4 billion.

Today in Asia, China is to release trade data for May and PPI and CPI figures.

The New Zealand dollar rose to 92.22 Australian cents from 91.98 cents yesterday and traded at 52.37 British pence from 52.44 pence. It fell to 77.13 yen from 77.42 yen and rose to 4.4908 yuan from 4.5019 yuan.


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