Dollar falls from two-month high amid report ECB will keep rates low
The New Zealand dollar fell from a two-month high amid speculation the European Central Bank will keep interest rates low for an extended period.
The kiwi rose as high as 87.48 US cents overnight and was trading at 87.19 cents at 5pm in Wellington, from 87.12 cents at 8am and 87.32 cents at 5pm yesterday. The trade-weighted index was little changed at 81.08 from 81.16 yesterday.
ECB president Mario Draghi told Dutch newspaper Telegraaf the central bank will continue to stimulate the regional economy until at least the end of 2016. The prospect of low European rates for longer than previously anticipated sapped demand for currencies such as the kiwi, which had been fuelled by upbeat Chinese manufacturing data yesterday.
"Yesterday we had a China PMI report which was quite strong and that caused and the Aussie and the Kiwi to rise against the US, and that rise for New Zealand lasted until about 6pm yesterday and then it stopped as you had some negative news out of Europe," Imre Speizer, senior market strategist at Westpac Banking Corp said. "The kiwi still looks quite strong in the near-term, so I'd be picking it to break above 87.50."
The New Zealand dollar was little changed at 92.48 Australian cents at 5pm, from 92.50 cents yesterday, and slipped to 88.89 yen, from 89.01 yen yesterday. The kiwi was little changed at 51.23 British pence, from 51.24 pence yesterday and traded at 64.14 euro cents from 64.17 cents.