The New Zealand dollar rose to a three-week high against the euro as investors were lured by the higher yield available in New Zealand, where the central bank is expected to hike interest rates tomorrow, while the European Central Bank last week cut rates.
The kiwi touched 62.95 euro cents, and was trading at 62.91 cents at 8am in Wellington from 62.54 cents at 5pm yesterday. The local currency advanced to 85.21 US cents from 84.99 cents yesterday.
The European Central Bank last week cut its key deposit rate to negative and introduced further stimulus in an attempt to bolster economic growth and ward off the threat of deflation. The central bank chiefs of Finland and Slovakia, who both sit on the ECB's 24-member governing council, reiterated that the bank could still do more to support the euozone economy following last week's move. That contrasts with the Reserve Bank of New Zealand, which is expected tomorrow to raise interest rates for a third time and signal further hikes are in the pipeline to head off inflation from a resurgent economy.
"Strength in the New Zealand dollar relative to its European peers was the most notable theme on the crosses overnight," Bank of New Zealand senior market strategist Kymberly Martin said in a note. "All eyes will be on the RBNZ's meeting tomorrow morning. We suspect the RBNZ will show sufficient commitment to its rate hiking process to extend the near-term bounce in the NZD/USD."
The British pound appeared to have been dragged down alongside the euro, Martin said.
The New Zealand dollar touched a two-week high of 50.89 British pence, from 50.55 pence yesterday ahead of a report on the UK's unemployment rate for April.
Today in New Zealand, data is released on electronic card spending for May at 10:45am.
The local currency edged up to 90.90 Australian cents from 90.82 cents yesterday ahead of a report on Australian consumer confidence today. A report on Australian business confidence yesterday showed the measure held steady following the nation's budget.
The kiwi advanced to 87.21 yen from 86.91 yen yesterday. The trade-weighted index gained to 79.54 from 79.26 yesterday.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Auckland council puts debt issuing plans on ice over Brexit concerns
- Shewan report measures possible by end of year
- Will people voluntarily stop owning cars within 20 or 30 years?
- Light rail the winner in latest Auckland Transport turnaround
- Uber launches free Pandora personalised music for its Kiwi, Australian and US drivers
Most listened to
- BNZ's Jason Wong says the movements in the currency market last week were some of the biggest in history
- CBL's Peter Harris on uncertain times in the UK insurance industry
- Govt performing an awkward political U-turn on foreign trusts. Rob Hosking with John Shewan and John Key
- Trade Minister Todd McClay says plans for an FTA with the EU will not be hindered by the Brexit
- Oxford University academic Malcolm McCulloch predicts the imminent death of the internal combustion engine