NZ dollar holds gain as ECB meeting, US employment loom

File photo / NZ Herald

The New Zealand dollar held gains in local trading as investors await the European Central Bank meeting and US employment in coming days, having recovered some appetite for risk-sensitive assets on growing confidence a ceasefire in Ukraine will be achieved.

The kiwi traded at 83.20 US cents at 5pm in Wellington from 83.27 cents at 8am, up from 82.94 cents yesterday. The trade-weighted index was little changed at 78.67 from 78.63 yesterday.

The ECB will review monetary policy on Thursday in Brussels and is expected to keep the status quo, though investors will watch president Mario Draghi for any commentary on potential stimulus injection for the regional economy.

That comes ahead of US employment figures for the month of August on Friday, which is seen as a gauge on whether the Federal Reserve will shift away from its near-zero interest rate policy.

"Today's trading has really been one of trying not to do much ahead of pretty big risk events in the next couple of days," said Raiko Shareef, currency strategist at Bank of New Zealand in Wellington. "For someone who's bearish, it's quite good to see the kiwi's not rebounding higher, and the bias is still to the downside."

The local currency got a boost earlier in the day on reports Russian and Ukrainian leaders had agreed on steps toward a ceasefire in eastern Ukraine, helping ease tensions that have stoked demand for safer assets.

Figures today showed New Zealand property values rose at the slowest annual pace in 14 months, as rising interest rates, home loan restrictions on low-equity mortgages and the upcoming general election weighed on the market.

The country's housing market had been an area of concern for the Reserve Bank, which it saw as threatening New Zealand's financial stability in the event of a downturn.

The kiwi was little changed at 87.21 yen at 5pm in Wellington from 87.23 yen yesterday after the Bank of Japan kept interest rates near zero and retained its quantitative easing programme to expand the monetary base at an annual pace of about 60 to 70 trillion yen.

The local currency fell to 89.01 Australian cents at 5pm in Wellington from 89.37 cents yesterday, and edged up to 63.27 euro cents from 63.18 cents. It increased to 50.55 British pence from 50.40 pence yesterday.