The New Zealand dollar rose to a two-month high against the euro after a European Central Bank official suggested more stimulus measures were likely for the region.
The kiwi touched 60.38 euro cents, and was trading at 60.27 cents at 8am in Wellington, from 59.41 cents at 5pm yesterday. The local currency advanced to 68.63 US cents from 68.21 cents yesterday as the latest US economic data stoked speculation the Federal Reserve won't lift interest rates soon.
The euro, shared by 19 members of the European Union, tumbled after ECB policymaker Ewald Nowotny said the bank must search for more ways to stimulate the Eurozone economy, prompting speculation the ECB may widen the scope of its current programme. The ECB meets next week in Malta although it isn't scheduled to update its quarterly forecasts until December.
"The euro tumbled against all it major trading partners in the aftermath of the remarks causing particularly sharp spikes in Aussie and kiwi as EUR/AUD and EUR/NZD trades were unwound," Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, said in a note. "While the market remains dubious about any Fed tightening action this year, the focus may shift on ECB next week and if (ECB president Mario) Draghi and company decide to rev up the QE programme the euro could come under further selling pressure over the near term horizon."
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