NZ dollar gains vs. euro after weaker German inflation adds to ECB pressure
By Jonathan Underhill
April 30 (BusinessDesk) - The New Zealand dollar gained against the euro after weaker-than-expected German inflation, stoking speculation prices may also be weaker across the Eurozone and adding to pressure on the European central Bank to act to weaken its currency.
The kiwi rose to 61.87 euro cents from 61.48 euro cents at 5pm in Wellington yesterday. The New Zealand dollar traded at 85.45 US cents, up from 85.25 cents yesterday.
Germany’s annual estimated harmonised consumer price index was at 1.1 percent, missing the 1.3 percent rate expected by economists. The figures from German statistics agency Destatis come a day before inflation data is released for the Eurozone, which may print weaker and add to calls for the ECB to act to drive down the euro.
“If the Eurozone number is weaker, I would expect the euro to come under immense pressure,” said Stuart Ive, senior adviser at OMF.
The ECB’s options could include moving to negative interest rates or quantitative easing though it may be two months before the central bank’s strategy is known, he said. Tensions in Ukraine have added to a mixed global picture for financial markets, he said.
In the New Zealand today, traders are awaiting dwelling consents for March and the ANZ Business Outlook for April, which will provide a further clue to company pricing intentions after consumer prices rose less than expected in the first quarter and gave the Reserve Bank les reason to rush at its tightening cycle.
The kiwi rose to 87.71 yen from 87.36 yen and was little changed at 92.18 Australian cents. It rose to 50.78 British pence from 50.69 British pence. The trade weighted index rose to 79.60 from 79.33.