NZ dollar falls to 11-month low vs euro on signs of EU growth, fading French jitters

Wednesday 17th May 2017

The New Zealand dollar fell to the lowest level in about 11 months against the euro as steady economic growth and improving investor confidence in the economic bloc saw its currency strengthen against the greenback.

The kiwi dollar fell to 62.11 euro cents as at 8:30am in Wellington from 62.59 cents late yesterday. The local currency rose to 68.86 US cents from 68.61 cents yesterday.

Germany's ZEW survey of investor sentiment rose to 35.1 in May from 26.3 a month earlier, while European Union gross domestic product growth came in at 0.5 percent as expected in the first quarter. The euro rose to a five-month high against the greenback amid ongoing uncertainty about the Trump administration's ability to enact policy change and questions about the pace of interest rate hikes by the Federal Reserve, contrasting with more upbeat sentiment for Europe.

"The EUR/USD has risen as doubts on the ability of the Trump administration to push through reforms has increased and the backdrop for Europe looks more stable – both politically the economically," said Con Williams, rural economist at ANZ Bank New Zealand.

The kiwi dollar didn't move much after dairy product prices rose at the GlobalDairyTrade auction overnight, increasing for the fifth consecutive time, amid solid demand for fat products. The GDT price index gained 3.2 percent from the previous auction two weeks ago to US$3,313. Some 21,236 tonnes of product was sold, down from 22,633 tonnes at the previous auction. Whole milk powder rose 1.3 percent to US$3,312 a tonne.

Today, traders will be watching the release of the first-quarter producer price index, while across the Tasman, the Westpac Consumer Confidence survey for May is released today and in Japan, March industrial production.

The trade-weighted index was at 74.71 from 74.86 late yesterday.

The local currency fell to 92.61 Australian cents from 92.84 cents and was little changed at 53.29 British pence. It slipped to 77.81 yen from 78.09 yen and fell to 4.7383 yuan from 4.7417 yuan.

(BusinessDesk)

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