NZ dollar rises to 2-1/2 year high vs. euro amid weak Eurozone data

Friday 9th January 2015

The New Zealand dollar touched a 2-1/2 year high against the euro as investors favour the outlook for the local economy over the weaker prospects for the Eurozone.

The kiwi touched 66.37 euro cents overnight, and was trading at 66.25 cents at 8am in Wellington, from 65.89 cents at 5pm yesterday. The local currency advanced to 78.17 US cents from 77.93 cents yesterday.

The euro declined, touching a fresh nine year low against the greenback, as weak economic reports from Europe continued to weigh on the common currency. November data released yesterday showed German factory orders slumped and Eurozone producer prices fell more than economists forecast, adding to pressure for the European Central Bank to increase stimulus measures at its Jan. 22 meeting to revive the region's economy after it slipped into deflation in December. ECB president Mario Draghi said in a letter to a European lawmaker that stimulus measures may include buying government bonds.

"There is little evidence that the euro area economy has responded to the interest rate cuts and the sharp decline in the euro over the second half of last year. As such, expectations will remain for the announcement of sovereign bond purchases in January," David Croy, senior rates strategist at ANZ Bank New Zealand, said in a note. "The New Zealand dollar continues to outpace other currencies in the hunt for yield."

The kiwi's record against the euro of 66.80 euro cents was set in August 2012.

"It is approaching post float highs and should be able to make an attempt at this in the coming weeks as calls for the euro to drop further intensify," Croy said.

ANZ expects the local currency to trade between 66 euro cents and 66.50 cents today.

In New Zealand today, building consent data for November is released at 10:45am. Later today, traders will be eyeing Chinese inflation data with the focus tonight on US non-farm payrolls data.

The New Zealand dollar advanced to 96.23 Australian cents from 96.04 cents yesterday ahead of Australian retail sales data today.

The kiwi edged up to 51.79 British pence from 51.66 pence yesterday after the Bank of England kept its policy unchanged as expected. The local currency advanced to 93.49 yen from 93.26 yen yesterday. The trade-weighted index rose to 79.91 from 79.74 yesterday.

BusinessDesk.co.nz

Comments from our readers

No comments yet