NZ dollar trades in tight range as ECB confirms end to quantitative easing

Friday 14th December 2018

The New Zealand dollar traded in a tight range as the European Central Bank confirmed it will end its quantitative easing programme at the end of the month, despite a gloomier economic outlook.

The kiwi was little changed at 68.62 US cents as at 8am in Wellington from 68.56 cents yesterday and traded at 60.38 euro cents from 60.31 cents.

ECB president Mario Draghi confirmed plans to stop the bond-buying programme at the end of December, bringing an end to the extraordinary stimulus package designed to shore up the region in the wake of the global financial crisis a decade ago. The central bank kept its key interest rate unchanged and said it will keep them at that level at least through to the middle of next year. However, the ECB downgraded its growth forecasts, and Draghi said the growing political uncertainty and increased trade protectionism created greater risks to the downside.

"Another session where familiar ranges have held, and that looks unlikely to change much today," ANZ Bank New Zealand economists Miles Workman and Philip Borkin said in a note. "Global forces are in the box seat, but kiwi has struggled to make much progress north of 69 cents."

British Prime Minister Theresa May's success in staving off a vote of no confidence in her leadership yesterday helped settle nervous investor sentiment, which had been weighing on the pound. May is in Brussels seeking concessions from the European Union in an effort to secure domestic parliamentary support for her Brexit deal. The kiwi traded at 54.24 British pence from 54.34 pence.

Local data today include November residential house sales and a manufacturing survey.

The kiwi traded 94.92 Australian cents from 94.84 cents yesterday and increased to 4.7209 Chinese yuan from 4.7116 yuan. It edged up to 77.93 yen from 77.77 yen yesterday. The trade-weighted index was at 74.91 from 74.82.

(BusinessDesk)

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