The New Zealand dollar touched a 2-1/2 year high against the euro as investors favour the outlook for the local economy over the weaker prospects for the Eurozone.
The kiwi touched 66.37 euro cents overnight, and was trading at 66.25 cents at 8am in Wellington, from 65.89 cents at 5pm yesterday. The local currency advanced to 78.17 US cents from 77.93 cents yesterday.
The euro declined, touching a fresh nine-year low against the greenback, as weak economic reports from Europe continued to weigh on the common currency. November data released yesterday showed German factory orders slumped and Eurozone producer prices fell more than economists forecast, adding to pressure for the European Central Bank to increase stimulus measures at its January 22 meeting to revive the region's economy after it slipped into deflation in December. ECB president Mario Draghi said in a letter to a European lawmaker that stimulus measures may include buying government bonds.
"There is little evidence that the euro area economy has responded to the interest rate cuts and the sharp decline in the euro over the second half of last year. As such, expectations will remain for the announcement of sovereign bond purchases in January," David Croy, senior rates strategist at ANZ Bank New Zealand, said in a note. "The New Zealand dollar continues to outpace other currencies in the hunt for yield."
The kiwi's record against the euro of 66.80 euro cents was set in August 2012.
