NZ dollar rises to record vs. euro after ECB meeting disappoints
By Hannah Lynch
Aug 03 (BusinessDesk) - The New Zealand dollar rose to a record high against the euro after European Central Bank President Mario Draghi provided investors with assurances but no immediate action to curb the region's debt crisis.
The New Zealand dollar rose as high as 66.66 euro cents, the highest since the single currency entered circulation in 2002. It traded at 66.41 cents at 8am up from 66.02 cents at 5pm yesterday. The kiwi initially jumped as high as 81.71 US cents overnight, before shedding gains to trade at 80.91 cents, little changed from 80.91 yesterday.
ECB officials are working on plans to buy bonds to help ease the euro-zone fiscal crisis, Draghi told reporters in Frankfurt. Details of the plan will be released in coming weeks. Investors were expecting Draghi to announce new measures to protect the regional economic union after last week's pledge to do "whatever it takes" to preserve the euro.
Stocks on both sides of the Atlantic fell following the announcement. The Standard & Poor's index shed 0.8 percent while Germany's DAX 30 dropped 2.2 percent.
"The euro got smashed against all the commodity currencies," said Stuart Ive, currency strategist at HiFX. "That looks unlikely to change in the near future with one band-aid being put on top of another" in the EU.
The New Zealand dollar rose to 52.15 British pence from 52.05 pence after the Bank of England kept its bond-buying program and interest rate unchanged.
On Thursday, Federal Reserve chairmen Ben Bernanke kept US monetary policy unchanged despite noting the world’s biggest economy may need help. Investors will be looking to Friday's US jobs data after the Fed indicated a sluggish economy may prompt further steps to boost growth. Employers added 100,000 new workers to their payrolls in July, up from 80,000 in June, according to Bloomberg survey.
"If it is comes out as a bad number we may see the kiwi go higher," Ive said. "It will mean there is more of a chance for quantitative easing"
There is no significant New Zealand data set for release today.
The New Zealand dollar increased to 77.36 Australian cents from 77.14 cents. The kiwi declined to 63.28 yen from 63.48 yen. The trade weighted index advanced to 73.14 from 73.