Sharechat Logo

NZ dollar rises to 6-week high vs euro before ECB, gains vs greenback

Thursday 8th June 2017

Text too small?

The New Zealand dollar rose to a six-week high against the euro ahead of a European Central Bank meeting that may see hints of a move to more normal monetary policy. It rose against the greenback as testimony from former FBI Director James Comey was published.

The kiwi rose to 63.84 euro cents as at 8am in Wellington, and earlier touched 64.22 cents, the highest since late April, from 63.68 cents late yesterday. It rose to 71.93 US cents from 71.69 cents.

Economists are divided on whether the ECB will signal an end to its period of extraordinarily accommodative monetary policy and how the region's central bank would manage that without driving up the euro. meanwhile, in the US, Comey's written testimony accuses US President Donald Trump of asking him to drop an investigation into his former national security adviser Michael Flynn, part of a wider probe into alleged Russian meddling in the 2016 election. Markets are concerned a loss of suport for Trump may derail his economy-boosting policy plans.

Traders are nervous ahead of the ECB meeting, “which will represent a turning point in the bank’s policy guidance, with growth risks likely to be raised to balanced from negative,” said Jason Wong, currency strategist at Bank of New Zealand, in a note. "There’s a bit more doubt on whether it removes the easing bias on rates, but we’d argue it’s well overdue anyway."

However, ANZ Bank New Zealand senior economist Sharon Zollner said the message from the ECB may be that policy remains accommodative “for a while yet” with an expectation "that
the inflation forecast will be cut despite a small lift in growth forecasts."

Zollner said any further negative headlines for Trump coming from Comey's testimony "will cause markets to negatively reassess the likelihood of his policy agenda – of most interest for markets, tax and regulatory reform – passing."

The kiwi traded at 55.50 British pence from 55.59 pence yesterday ahead of elections in the UK, where Prime Minister Theresa May is seen retaining power.

The kiwi fell to 95.08 Australian cents as at local currency traded at 95.21 Australian cents from 94.85 cents yesterday. The kiwi rose to 79.02 yen from 78.57 yen and increased to 4.8907 yuan from 4.8699 yuan. The trade-weighted index rose to 77.30 from 77.03.

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Transpower sees no risk to credit metrics from incentive change
NZ dollar rises, an outlier amid rising Gulf tensions
Craigmore spends $32M to expand Kerikeri kiwifruit crop by 'more than a third'
CentrePort eyes further hub expansion
South Port beats guidance, earnings in line with 2018 record
Plexure sees revenue growth from White Castle deal
22nd July 2019 Morning Report
NZ dollar treading water as markets focus on Iran
MARKET CLOSE: NZ shares extend gain as passive funds bolster prices; Tourism Holdings climbs
NZ dollar headed for 1.3% weekly gain on expectations of a Fed rate cut

IRG See IRG research reports