The New Zealand dollar rose to a 21-month high against the euro after data showed the Eurozone slipped into deflation, increasing pressure on the European Central Bank to add further stimulus. The kiwi touched a fresh post-float high against the Australian dollar as investors favour the outlook for the local economy.

The kiwi touched 65.74 euro cents, and was trading at 65.63 cents at 8am in Wellington, from 65.28 cents at 5pm yesterday. The local currency touched 96.52 Australian cents, its highest since the Aussie was floated in 1983, and was trading at 96.38 cents at 8am from 95.98 cents yesterday. The New Zealand dollar advanced to 77.69 US cents from 77.53 cents yesterday.

The euro fell to a nine-year low against the greenback after a report showed Eurozone inflation turned negative for the first time since 2009, with a slump in oil prices driving a bigger than expected decline. Consumer prices in the 18 countries that share the euro fell 0.2 per cent in December from the year earlier, lower than the 0.1 per cent fall forecast in a Reuters poll of economists. That strengthened speculation the ECB will launch a programme of buying government bonds with new money, known as quantitative easing, at its January 22 meeting.

Sources : www.nzherald.co.nz