NZ dollar hits two-week high vs. euro amid speculation further stimulus in the wind for Europe

Monday 4th November 2013

The New Zealand dollar rose to its highest in almost two weeks against the euro on speculation European Central Bank chief Mario Draghi may add further stimulus in coming months to spur growth, lessening the lure of the common currency.

The kiwi touched 61.30 euro cents over the weekend, and was at 61.20 euro cents at 8am in Wellington, from 60.94 cents on Friday. The local currency slipped to 82.56 US cents from 82.63 cents at the New York close and 82.62 cents in Wellington Friday.

The euro has declined 1.7 percent against the kiwi since weaker euro-zone inflation figures last Thursday fuelled speculation the ECB will need to provide further stimulus to the regional economy to boost growth. The bank meets this Thursday, and money markets, which were already pricing in the possibility of looser ECB policy in the coming year, now reflect an outside chance of a move in the next few months, Reuters said.

"Euro is under pressure as we go into the ECB decision Thursday," Sharon Zollner, senior economist at ANZ New Zealand, said in a note. "The Draghi press conference will be a driver for the euro."

In Asia today, traders will be eyeing a report on Australian retail sales for September, due 1:30pm New Zealand time. Other scheduled for Australia today include job advertisements, house prices, and an inflation indicator.

The New Zealand dollar rose to 87.40 Australian cents at 8am in Wellington, from 87.12 cents on Friday.

In New Zealand today, traders will be eyeing the ANZ Commodity Prices Index for October, due for release at 1pm.

The local currency increased to 51.82 British pence from 51.52 pence on Friday and rose to 81.45 yen from 80.87 yen. The trade-weighted index advanced to 76.87 from 76.63 in Wellington Friday.

BusinessDesk.co.nz

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