NZ Dollar Rises On Rising Risk Appetite

The New Zealand dollar strengthened against the other major currencies in the Asian session on Thursday amid rising risk appetite, following the record gains overnight on Wall Street and on expectations that the European Central Bank will extend its asset purchase program at its monetary policy meeting later in the day.

The ECB is widely expected to leave interest rates unchanged for a sixth straight session and also extend its asset purchase program beyond March of 2017 on the recent political turmoil in Europe following the referendum in Italy.

Meanwhile, the sentiment boosted earlier in the day after Reserve Bank Governor Graeme Wheeler said he sees "continued strong growth" in the economy in the next 18 months.

While speaking at a business conference in Greymouth, Wheeler said, "The low point for CPI inflation has probably passed and, supported by the improvement in global commodity prices in recent months, we expect the December quarter 2016 CPI data to confirm that annual CPI inflation is moving back within the 1 to 3 percent target band,".

Wednesday, the NZ dollar rose 0.11 percent against the U.S. dollar, 0.07 percent against the yen, and 0.31 percent against the euro. Meanwhile, the kiwi fell against the aussie.

In the Asian trading, the NZ dollar rose to a 3-day high of 1.4910 against the euro and nearly a 1-year high of 82.01 against the yen, from yesterday's closing quotes of 1.5001 and 81.49, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 1.47 against the euro, and 83.00 against the yen.

Against the U.S. and the Australian dollars, the kiwi advanced to nearly a 4-week high of 0.7219 and nearly a 1-month high of 1.0381 from yesterday's closing quotes of 0.7164 and 1.0439, respectively. The kiwi may test resistance near 0.74 against the greenback and 1.02 against the aussie.

Looking ahead, the European Central bank will announce its interest rate decision at 7:45 am ET. The economists expect the central bank's deposit rate and refinancing rate to be unchanged at -0.4 percent and 0 percent, respectively.

Following the announcement, European Central Bank President Mario Draghi will hold the customary post-meeting press conference.

In the New York session, Canada housing starts for November, building permits and house price index, for October and U.S. weekly jobless claims for the week ended December 3, are due to be released.

Later in the day, Bank of Canada Governor Stephen Poloz, Canada Minister of Finance Bill Morneau and Minister of Status of Women Patty Hajdu are scheduled to attend an event in Gatineau, Quebec, Canada.