NZ dollar makes gains against euro

The New Zealand dollar rose to its highest level in almost seven weeks against the euro on speculation the European Central Bank will ease monetary policy at its meeting next month.

 
 

DollarThe kiwi touched 63.17 euro cents early on Wednesday morning, its highest level since March 28, and was trading at 62.98 cents at 8am in Wellington, from 62.72 cents at the 5pm market close a day earlier.

The local currency was unchanged at 86.30 US cents.

The euro was the worst performing major currency overnight after the ZEW German investor confidence gauge declined for a fifth consecutive month in May to its lowest level since January last year. Adding to declines in the euro, Dow Jones reported that the German central bank is now willing to back an array of stimulus measures by the European Central Bank next month if needed to fight low inflation.

“For years the Bundesbank has been the most trenchant opponent to extraordinary monetary policy measures,” Raiko Shareef, currency strategist at Bank of New Zealand, said. “This reported shift in its mindset lends ECB president (Mario) Draghi considerable support if he decides to cut interest rates in June, or even engage in quantitative easing.”

Mr Draghi kept the ECB’s interest rate at a record low last month but signalled the bank was ready to act at its next meeting.

In New Zealand traders are awaiting the Reserve Bank’s latest six-monthly Financial Stability Report and Governor Graeme Wheeler will also appear before the government finance select committee.

First quarter retail sales data is also being released.

The New Zealand dollar was little changed at 92.23 Australian cents from 92.22 cents following the Australian federal budget and weaker than expected Chinese data on industrial production, retail sales, home sales and investment.

The kiwi advanced to 51.29 British pence from 51.12 pence ahead of the Bank of England’s quarterly inflation report.

The local currency edged up to 88.27 yen from 88.24 yen while the trade-weighted index gained to 80.32 from 80.21.

 
 

 
[vivafbcomment]