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Kiwi hits three-week high against euro

NZ Newswire logoNZ Newswire 29/05/2017 Jonathan Underhill

The New Zealand dollar has touched a three-week high against the euro 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 on Tuesday in Wellington, having reached 63.39c overnight, the highest since May 11, from 63.28c late Monday. The kiwi slipped to US70.57 US cents from US70.67c on Monday.

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] described the euro area's economic upswing as 'increasingly solid' and broadening," BNZ currency strategist Jason Wong said in a note.

Still, on monetary policy his views remained unchanged, he said. "

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.

On the domestic calendar, traders will be watching for the release of building permits for April on Tuesday for an update on the housing market.

On Tuesday morning, the New Zealand dollar traded at 94.83 Australian cents from A94.95c on Monday and fell to 4.8372 yuan from 4.8413 yuan. It was little changed at 54.98 British pence from 55.05p and fell to 78.50 yen from 78.68 yen.

The trade-weighted index was at 76.39 from 76.44.

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