Among major currencies, the New Zealand dollar had the biggest lead on Thursday, after it rose by 0.7 percent following the speech by Graeme Wheeler, the Reserve Bank Governor, that added to the speculation that next year the bank would increase the interest rates.
With all the attention focused on a meeting of the European Central Bank that is widely anticipated to extend their program for quantitative easing, the euro was approximately a quarter of a percent higher than the dollar. The yen and other major pairs were largely flat.
New Zealand has frequently had higher interest rates than other developed countries since the financial crisis in 2008. Wheeler confirmed that the most recent guidance from the bank with regards to the rates was improbable to drop lower than the 1.75 percent it is currently.
Wheeler also pointed out that the beginnings of change are higher in global inflation expectations which could put an end to the incredibly easy settings in the other top economies and alleviate upward pressure on the New Zealand dollar.
Contrarily, it was seen as the removal of one barrier to higher domestic rates in the coming year which could support the New Zealand dollar.
Credit Agricole (PA: CAGR) analysts said this morning Wheeler hit an upbeat tone about the inflation and growth and he pointed to the global factors that have kept the New Zealand dollar overvalue from decreasing. They also noted that the market increased the chances in 2017 of a rate hike could be almost 80 percent.
The New Zealand dollar gained 0.7 percent to {currency}0.7212.
On Wednesday there were steady gains for the euro, and it gained another 0.2 percent in the early deals in Europe that led to a trade of only half a cent off of the three-week high against the dollar.
Some traders and investors stated that {currency}1.08-{currency}1.09 seemed like stable resistance levels to allow for further gains for the single currency.
Oppenheimer Funds in New York’s portfolio manager and macro strategist Alessio de Longis said: “there is a risk for a stronger euro if the message is in line which the expectations.”
He also notes “in line with the view of the euro that rallies need to be sold. They are still pushing the euro to be lower in the coming year.” According to him, “if they are correct with regards to the dollar’s strength then in the next year it should break the balance.”
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