NZ dollar falls to 2-month low vs euro on ‘unlimited’ ECB plan
Sept. 6 (BusinessDesk) - The New Zealand dollar fell to the lowest level in more than two months against the euro after reports that European Central Bank President Mario Draghi will unveil plans for unlimited purchases of government debt, stoking demand for the common currency.
The kiwi dollar fell to 63.01 euro cents, the lowest since June 25, from 63.34 cents at 5pm in Wellington yesterday. The local currency traded at 79.43 US cents from 79.45 cents yesterday.
The euro was broadly stronger after Bloomberg cited two ECB officials saying bonds purchased under an unlimited programme would be sterilised to limit concerns about the impact of printing money. Draghi is to announce his plans after the ECB’s meeting on Thursday in Europe. The kiwi held its gains against the Australian dollar after economic across the Tasman showed economic growth just undershot forecasts with consumption weaker than expected.
“Financial market sentiment brightened overnight, as ‘leaked’ details of the ECB’s bond buying plan hit the market,” said Mike Jones, currency strategist at bank of New Zealand. “Whether the overnight improvement in sentiment can be retained likely rests on ECB chief Draghi confirming unlimited, sterilised bond purchases are indeed part of the plan.”
The kiwi dollar traded at 77.91 Australian cents from 77.88 cents yesterday, having gained after gross domestic product came in at 0.6 percent in the second quarter, versus expectations of 0.7 percent growth. Australia releases employment data today, expected to show the jobless rate edged up to 5.3 percent in August while the economy added 5,000 jobs.
The trade-weighted index fell to 71.55 from 71.63. The New Zealand dollar traded at 62.26 Japanese yen, little changed from yesterday and fell to 49.92 British pence from 50.08 pence.