NZ dollar climbs after Germany and France pledge to support ECB
The New Zealand dollar rose against the greenback and the euro after Germany and France pledged to do everything to keep the euro intact, following speculation the European Central Bank may act to bolster the common currency.
The New Zealand dollar rose to 81.05 US cents at 8am from 80.88 cents at the close of trading in New York on Friday. The kiwi increased to 65.82 euro cents from 65.64 cents last week. The trade weighted index was little changed on 80.98 from 80.88.
German Chancellor Angela Merkel and French President Francois Hollande said they'll do "everything" necessary to protect the single currency. Germany and France are "bound by the deepest duty" to keep the 17-nation bloc intact, they said in a joint statement. That echoes a similar promise from ECB President Mario Draghi to buy government bonds to accelerate efforts to ease the region's crisis.
"The market has rallied on the hope something will come out of all this," said Stuart Ive, Currency strategist at HiFX. "In our local currency it means risk is on and if any of these proposed factors come into play we will see the kiwi race to the upside."
Ive said the New Zealand dollar is likely to finish the week higher, trading in a range of between 79.60 US cents to 82.40 cents, with ECB and Federal Reserve meetings "the majors" for markets.
The Fed opens a two-day policy meeting on Wednesday, while the ECB announces its review of monetary policy on Thursday.
New Zealand's building consents for June will be released by Statistics New Zealand this morning.
The New Zealand dollar increased to 77.30 Australian cents from 77.09 cents at the close of trading in New York. The kiwi gained to 51.48 British pence from 51.35 pence last week and advanced to 63.55 yen from 63.42 yen.
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