New Zealand Dollar Rises Against Euro, British Pound, Australian Dollar
By Reissa Su | July 5, 2013 3:36 PM EST
The New Zealand dollar soared against the euro and British pound after their respective central banks focused on easing bias which helped increase the demand for the higher yielding currency. The Kiwi also became stronger against the Aussie dollar.
The Kiwi dollar rose to 52.17 against the British pound, the highest in a month, and now trades for 51.95 pence up from 50.97 at closing time last Thursday in Wellington. The Kiwi dollar jumped to 60.85 euro cents, currently trading at 60.67 cents up from 59.87 cents in yesterday's close.
U.S. markets were closed for Independence Day celebrations on July 4. This means the focus will shift to the pound and euro with the New Zealand dollar set to rise against both currencies according to ANZ Bank senior economist, Sharon Zollner.
Currency traders will be on the lookout for a key U.S. employment report and take note of signs of improvement that may cause the Federal Reserve to pull back from its asset purchase programme worth US$85 billion a month.
The New Zealand Dollar increased to 85.62 against the Australian dollar from Thursday's close of 85.40 cents. The Kiwi dollar rallied in spite Reserve Bank of Australia deputy Phillip Lowe said that markets made the wrong assumptions about Governor Glenn Stevens's statement. Earlier this week, Mr. Stevens announced holding of interest rates for at least another month.
The New Zealand dollar is expected to appreciate further against the Australian dollar after the cross rate almost hits a five-year high. This reflects the different direction of interest rates between Australia and New Zealand according to economists.
Despite the confusion surrounding the comments of RBA's Mr. Stevens, analysts still expect a cut on interest rates possibly in August. The current rate is pegged at 2.75 per cent.
Darren Gibbs, an economist for Deutsche Bank, says the investment community has a strong conviction that the Kiwi dollar would continue to rise against the Aussie dollar.
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