NZ dollar falls after ECB lifts growth forecast
The New Zealand dollar fell against the euro after the European Central Bank lifted its forecast for economic growth and didn't signal any alarm about the euro's 15 percent gain against the greenback this year.
The kiwi was trading at 60.16 euro cents as at 8am in Wellington from 60.39 cents late yesterday. It was at 72.33USc from 72.02USc.
The ECB said it is still waiting for evidence of a revival in inflation and did touch on the euro but only to refer to its volatility rather than its strength while President Mario Draghi said financial conditions in the eurozone were still broadly supportive. The kiwi fell late yesterday against the euro and the greenback after the latest Colmar Brunton poll showed National down two points to 39 percent and Labour unchanged on 43 percent, while Labour's Jacinda Adern leads National's Bill English as preferred prime minister by 34 percent to 33 percent.
The euro's gains "may be linked to the ECB's more upbeat economic outlook and the fact that euro strength only had a small negative impact on the bank's inflation forecasts," said Jason Wong, currency strategist at Bank of New Zealand, in a note. He described the sell-off in the kiwi after the political poll as a knee-jerk reaction. "We see knee-jerk reactions like this as short-term trading opportunities because ultimately we don't see the election outcome having any material impact for the NZ dollar."
Traders will be watching for New Zealand manufacturing data for the second quarter, due out this morning while China is to release trade data for August. Federal Reserve Bank of New York President William Dudley is scheduled to speak late morning, New Zealand time, and Reserve Bank of Australia governor Philip Lowe gives a speech in Sydney today.
The kiwi fell to 89.86Ac Australian from 90.12Ac late yesterday. It slipped to 78.45 yen from 78.53 yen and was little changed at 55.20 British pence. The kiwi declined to 4.6879 yuan from 4.6967 yuan. The trade weighted index was at 75.02 from 75.04.