The New Zealand dollar gained, following the euro higher, after the European Central Bank refrained from injecting more stimulus into the sluggish regional economy, and ahead of US employment data, which is closely watched by the market.
The kiwi rose to 77.80 US cents at 8am in Wellington from 77.46
cents yesterday. The trade-weighted index advanced to 78.32 from 78.07 yesterday.
The euro rallied against the greenback after investors were disappointed ECB president Mario Draghi didn't expand its asset purchase programme, currently consisting of covered bonds and asset-backed securities, to include sovereign debt. The European currency later pared those gains after a report said bank officials were preparing to ease policy in January. The greenback is likely to get a boost if non-farm payrolls data on Friday in Washington continue to show strength in the world's biggest economy, as expectations for a US rate hike next year build.
"Everyone was disappointed the ECB didn't deliver on anything at this meeting and everyone was short euro, so that squeezed higher," said Raiko Shareef, currency strategist at Bank of New Zealand in Wellington. "It's strange the kiwi followed to the extent that it did, and shows how difficult it is to test 77 (US cents) at the moment."
