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Kiwi up against euro, greenback

NZ Newswire logoNZ Newswire 7/06/2017 Jonathan Underhill

The New Zealand dollar has risen to a six-week high against the euro ahead of a European Central Bank meeting that may see hints of a move to more normal monetary policy.

It also rose against the greenback as testimony from former FBI Director James Comey was published.

The kiwi rose to 63.84 euro cents as at 8am on Thursday in Wellington, and earlier touched 64.22c, the highest since late April, from 63.68c late Wednesday. It rose to US71.93c from US71.69c.

Economists are divided on whether the ECB will signal an end to its period of extraordinarily accommodative monetary policy and how the region's central bank would manage that without driving up the euro.

Meanwhile, in the US, Mr Comey's written testimony accuses US President Donald Trump of asking him to drop an investigation into his former national security adviser Michael Flynn. Markets are concerned a loss of suport for Mr Trump may derail his economy-boosting policy plans.

Traders are nervous ahead of the ECB meeting, "which will represent a turning point in the bank's policy guidance, with growth risks likely to be raised to balanced from negative," said BNZ currency strategist Jason Wong.

"There's a bit more doubt on whether it removes the easing bias on rates, but we'd argue it's well overdue anyway."

ANZ Bank New Zealand senior economist Sharon Zollner says any further negative headlines for Mr Trump coming from Mr Comey's testimony "will cause markets to negatively reassess the likelihood of his policy agenda - of most interest for markets, tax and regulatory reform - passing."

On Thursday morning, the kiwi traded at 55.50 British pence from 55.59p on Wednesday. It fell to 95.08 Australian cents from A94.85c, rose to 79.02 yen from 78.57 yen and increased to 4.8907 yuan from 4.8699 yuan.

The trade-weighted index rose to 77.30 from 77.03.

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