NZ dollar rises as optimism about Ukraine ceasefire increases allure of riskier currencies
By Tina Morrison
Sep. 4 (BusinessDesk) - The New Zealand dollar advanced on optimism a ceasefire could be agreed in Ukraine, improving the outlook for global growth and increasing the allure of riskier currencies.
The kiwi rose to rose to 83.27 US cents at 8am in Wellington from 82.94 cents at 5pm yesterday. The trade-weighted index edged up to 78.73 from 78.63 yesterday.
Investors' appetite for riskier currencies, such as the kiwi, increased after reports Russian and Ukrainian leaders had agreed on steps toward a cease-fire in eastern Ukraine, helping ease tensions that have stoked demand for safer assets. Russian president Vladimir Putin is reported to have outlined a peace plan for eastern Ukraine after agreeing with his Ukrainian counterpart Petro Poroshenko on steps toward a cease-fire in the conflict that has raged for more than five months. The two sides have planned talks in Minsk on Friday.
"Anything that has happened overnight is really do with events of a potential ceasefire originating in Ukraine," said Stuart Ive, senior dealer, foreign exchange, at OMF. "The market has taken it that if they do declare a ceasefire it's going to be good for global growth so we have seen a big swing around the US dollar with risk coming back on very quickly."
Kiwi has bounced off a solid support level of 82.85 US cents, Ive said.
Today, state-owned Quotable Value releases its latest monthly data on New Zealand house prices
The New Zealand dollar fell to 89.08 Australian cents from 89.37 cents yesterday as the Australian dollar strengthened on speculation the Reserve Bank of Australia won't cut interest rates further following better than expected second-quarter GDP data yesterday. Today, investors will be focused on Australian retail sales and trade balance data.
The kiwi advanced to 63.34 euro cents from 63.18 cents yesterday ahead of the European Central Bank meeting today where no change in policy is expected. Traders will be eyeing any comments from ECB president Mario Draghi about the prospects of further stimulus to boost inflation.
The local currency gained to 50.58 British pence from 50.40 pence ahead of the Bank of England meeting today where no change to policy is expected.
The New Zealand dollar was unchanged at 87.23 yen ahead of the Bank of Japan meeting today where no change is expected.