By Paul McBeth
Oct. 31 (BusinessDesk) - The New Zealand dollar reached a two-month high against the euro as Europe's economy grew at its slowest pace since 2014.
The kiwi rose to 57.73 euro cents as at 8am in Wellington from 57.50 cents yesterday. It traded at 65.50 US cents from 65.46 cents yesterday.
Euro-zone growth slowed to an annual pace of 1.7 percent in the September quarter from 2.2 percent in June. That was less than expected and reaffirmed fears over the region's economic health.
Italy was among the laggards in the regional bloc, and its government's plans to run bigger deficits than the European Union is comfortable with have weighed on investor expectations for growth. The European Central Bank last week stuck to its plans to start unwinding quantitative easing later this year with a view to higher interest rates in 2019.
"It’s no secret that growth momentum in the EU has slowed recently, but ECB President Draghi has yet to acknowledge this growth risk," ANZ Bank New Zealand economists Sharon Zollner and Liz Kendall said in a note. "Weaker euro area GDP and generalised kiwi strength saw this cross push higher overnight."
The local currency held on to gains against a broadly stronger greenback after US President Donald Trump yesterday talked up the prospects for a "great deal" with China. The world's two biggest economies have been locked in a trade war for the past 18 months. The greenback has been buoyed by the Federal Reserve's plans to raise interest rates.
The kiwi traded at 4.5622 Chinese yuan from 4.5603 yuan yesterday.
Local data today include October building consents and the ANZ business confidence survey.
Australian inflation data today will also be in view, as will the Bank of Japan's monetary policy statement. The kiwi traded at 92.25 Australian cents from 92.33 cents yesterday and increased to 73.96 yen from 73.72 yen.
The local currency rose to 51.57 British pence from 51.11 pence yesterday as investors remain wary of the UK and EU failing to reach agreement on Brexit.