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NZ dollar lifts against euro after ECB postpones out rate hikes

Friday 8th March 2019

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The New Zealand dollar lifted against the euro after the European Central Bank pushed out the timing of its first post-crisis rate hike on a softer outlook. 

The kiwi was trading at 60.24 euro cents at 8am in Wellington from 60 euro cents at 5pm in Wellington. It was at 67.58 US cents versus  67.84 US cents at 5pm.

The ECB had previously said rates would remain at their record low levels through the (European) summer, it said it now expected them to stay there “at least through the end of 2019”.

It also launched a third Targeted Long-Term Refinancing Operation consisting of two-year loans aimed partly at helping banks roll over 720 billion euros in existing TLTROs and so averting a credit squeeze that could exacerbate the economic slowdown, Reuters reported.

"Globally, the softer outlook in the euro area will weigh on monetary policy considerations outside the bloc. Although Europe does not have large direct effects on New Zealand, it’s fair to say that the broader global picture will be weighing on the RBNZ too," said ANZ Bank FX/rates strategist Sandeep Parekh. 

On the day, the domestic focus will be on the outlook for activity, with the Quarterly Manufacturing Survey and Building Work Put in Place surveys due today. Both are components of gross domestic product. ANZ is expecting the fourth quarter GDP to have lifted 0.6 percent on quarter but says "today's data could tip the balance in either direction."  Parekh is expecting a small rebound in manufacturing volumes and a fall in total building work.

The focus will then shift to US jobs data due later in the global trading day. 

The kiwi was trading at 51.60 British pence from 51.45, 75.38 yen from 75.77 and at 4.5375 Chinese yuan from 4.5511. It was at at 96.20 Australian cents from 96.31 and the trade-weighted index was at 73.55 points from 73.67.


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