The New Zealand dollar skidded to a near one-year low against the euro on Friday after the European Central Bank staggered markets by signalling it would likely hike interest rates in April, far earlier than anyone seriously expected. The timing was particularly tough for the NZ dollar given intense speculation the Reserve Bank of New Zealand (RBNZ) will cut its rates next week, perhaps by up to 50 basis points.
The euro soared nearly five cents in the past 24 hours to as far as NZ$1.8935, reaching highs not seen since April, 2010. It was last around NZ$1.8877, having gained more than three percent this week. The euro, this week's top performer against the US dollar, also zoomed higher on the Swiss franc and yen after the European Central Bank stunned investors by signalling it would hike at its April meeting. This euro spike put an additional strain on an already ailing kiwi, which sank further to a 12-week low of$0.7367. Support is now at $0.7343 and resistance at $0.7423.
The NZ currency has been battered by a host of negatives including expectations of a rate cut and sharply reduced GDP forecasts. It fell 5.2 percent against the US dollar in the past four weeks. A diverging rate outlook between New Zealand and Australia propelled the Aussie to a fresh 19-year peak of around NZ$1.3731, bringing gains in the last eight sessions to 4 percent. It last hovered around NZ$1.3727.
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