Kiwi falls from 3-week high v euro after Draghi says stimulus still needed
The New Zealand dollar touched a three-week high against the euro overnight, before retreating, after European Central Bank President Mario Draghi said the regional economic bloc still requires stimulus even as it shows signs of improved growth.
The kiwi traded at 63.18 euro cents as at 8am in Wellington, having reached 63.39 cents overnight, the highest since May 11, from 63.28 cents late yesterday. The kiwi slipped to 70.57 US cents from 70.67 cents yesterday.
Draghi told the European Parliament's committee on financial affairs that inflation in the EU remained subdued and "we still need very accommodative financing conditions," which in turn required stimulatory monetary policy. The comments come ahead of the ECB's June 9 meeting, where there has been speculation the bank will drop some of its dovish language amid signs of improving economic growth.
"Draghi spoke to the European Parliament and he described the euro area's economic upswing as 'increasingly solid' and broadening," Jason Wong, currency strategist at Bank of New Zealand, said in a note. Still, "on monetary policy his views remained unchanged. Our call on a stronger euro is based on the ECB gradually changing its language towards a less accommodative tone this year."
Trading was relatively subdued with the US, UK and China markets closed for public holidays on Monday.
Speaking at the Symposium on Asian Banking and Finance in Singapore, in San Francisco Fed President John C. Williams, who isn't a voting member, said he still expects the Fed to raise interest rates three times in 2017.
On the domestic calendar, traders will be watching for the release of building permits for April today for an update on the housing market.
The trade-weighted index was at 76.39 from 76.44 late yesterday.
It traded at 94.83 Australian cents from 94.95 cents and fell to 4.8372 yuan from 4.8413 yuan. It was little changed at 54.98 British pence from 55.05 pence and fell to 78.50 yen from 78.68 yen.