NZ dollar jumps against euro after ECB eyes government bond buying
The New Zealand dollar jumped to a two-month high against the euro after European Central Bank president Mario Draghi said the bank may buy government bonds to stimulate the Eurozone economy.
The kiwi touched 63.75 euro cents, and was trading at 63.58 cents at 8am in Wellington, from 63.40 cents at 5pm yesterday. The local currency slipped to 79.18 US cents from 79.58 cents yesterday.
The euro declined after ECB president Draghi told lawmakers in testimony to the European parliament that the bank may consider sovereign bond purchases as part of unconventional measures to boost growth in the region. The ECB is mulling further measures to stimulate the region's lacklustre economy, and the prospect of adding more money to circulation weighed on the euro.
"The euro was on the back foot," Bank of New Zealand senior market strategist Kymberly Martin said in a note. "With the prospect of further ECB stimulus, including sovereign bond buying, the NZD/EUR has pushed up to 63.70. This is its highest level since September."
In New Zealand, the focus for currency markets is on the upcoming Fonterra Cooperative Group GlobalDairyTrade auction overnight. BNZ's Martin said she hopes to see some stabilisation in prices following declines this year.
The New Zealand dollar rose to 90.85 Australian cents from 90.58 cents yesterday ahead of the release of the Reserve Bank of Australia minutes from its last meeting and a speech by governor Glenn Stevens at the Committee for Economic Development of Australia dinner in Melbourne tonight.
The local currency was little changed at 50.62 British pence from 50.63 pence yesterday and at 92.22 yen from 92.23 yen. The trade-weighted index inched lower to 78.57 from 78.60 yesterday.