The New Zealand dollar rose against the euro on speculation German Chancellor Angela Merkel will have a difficult time forming a coalition after winning a fourth term in office and fell against the yen on heightened Korean peninsula tensions.
The kiwi traded at 61.33 euro cents as at 8am in Wellington from 60.80 cents late yesterday. It fell to 81.11 yen from 81.40 yen. The kiwi was little changed at 72.66 US cents from 72.54 cents.
Merkel is seen struggling to form a coalition, creating an extending period of uncertainty, after support for former partners dissipated in last weekend's elections and the anti-immigration, far-right Alternative for Germany (AfD) entered the German parliament, while Germany's IFO business confidence fell to 107.4 this month - weaker than expected - from 107.8 last month.
The yen strengthened in a flight to safety after North Korea's foreign minister Ri Yong Ho said US President Donald Trump had made a declaration of war and his country might shoot down US warplanes, while Japan's Prime Minister Shinzō Abe called a snap election.
"A risk-off tone has developed, with US-North Korea tensions escalating, which sees yen head the leaderboard," said Jason Wong, currency strategist at Bank of New Zealand, in a note. Meanwhile, "Merkel [is] scrambling to form a government with new political partners, a process that is expected to take months, rather than weeks."
