Kiwi gains as Cyprus deadline looms

THE New Zealand dollar gained against the euro as Cyprus nears a deadline to secure a European Union bailout to avoid a collapse of its banks and the possible exit from the euro zone.

The kiwi traded at 64.39 euro cents from 64.22 cents in late New York trading on Friday. It slipped to 83.38 US cents from 83.51 cents.

Cyprus faces a Monday deadline to avoid the collapse of its banking system. President Nicos Anastasiades held last minute talks with lenders on Sunday though his government is divided and Cypriots are on the streets protesting, Reuters reported.

Failure to reach agreement with the EU, International Monetary Fund and European Central Bank may see the tiny island nation become the first to leave the euro.

"The local calendars are empty today, all eyes likely to be on the Cyprus/IMF/EU/ECB negotiations over the bailout," said Imre Speizer, senior market strategist at Westpac banking Corp. "A failure to agree with the troika could lead to speculation of a euro-exit."

The ECB imposed the deadline for the euros10 billion ($NZ15.5 billion) bailout, threatening to cut off emergency funding to Cypriot banks if a deal can't be struck, Bloomberg reported.

The trade-weighted index was at 76.48 from 76.47 in New York on Friday. The kiwi traded at 79.87 Australian cents from 79.91 cents and slipped to 78.77 yen from 78.84 yen. It traded little changed at 54.73 British pence.

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Kiwi gains as Cyprus deadline looms

THE New Zealand dollar gained against the euro as Cyprus nears a deadline to secure a European Union bailout to avoid a collapse of its banks and the possible exit from the euro zone.

The kiwi traded at 64.39 euro cents from 64.22 cents in late New York trading on Friday. It slipped to 83.38 US cents from 83.51 cents.

Cyprus faces a Monday deadline to avoid the collapse of its banking system. President Nicos Anastasiades held last minute talks with lenders on Sunday though his government is divided and Cypriots are on the streets protesting, Reuters reported.

Failure to reach agreement with the EU, International Monetary Fund and European Central Bank may see the tiny island nation become the first to leave the euro.

"The local calendars are empty today, all eyes likely to be on the Cyprus/IMF/EU/ECB negotiations over the bailout," said Imre Speizer, senior market strategist at Westpac banking Corp. "A failure to agree with the troika could lead to speculation of a euro-exit."

The ECB imposed the deadline for the euros10 billion ($NZ15.5 billion) bailout, threatening to cut off emergency funding to Cypriot banks if a deal can't be struck, Bloomberg reported.

The trade-weighted index was at 76.48 from 76.47 in New York on Friday. The kiwi traded at 79.87 Australian cents from 79.91 cents and slipped to 78.77 yen from 78.84 yen. It traded little changed at 54.73 British pence.

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Dollar gains on solid US retail sales data

THE dollar rebounded after losing against the euro for two days, as strong US retail sales data highlighted the continuing divergence between the American and European economies.

The euro fell to $1.2962 at 2200 GMT (0900 AEDT, Thursday) - compared to $1.3035 late Tuesday - after the US Commerce Department released data showing retail sales gaining 1.1 per cent in February over the month before, despite an increase in payroll taxes that hit pay in January.

Stripping out often volatile autos, petrol and building materials, core sales were up a solid 0.4 per cent.

"The data are consistent with total real consumption rising at around a 2.8 per cent annual rate so far" in the first quarter, said Jim O'Sullivan, US economist at High Frequency Economics.

"That is an impressive performance given the hit to spending power from the payroll tax hike."

The yen slipped as politicians in Tokyo debated the strongly pro-stimulus team nominated to lead the Bank of Japan.

According to reports, Japan's largest opposition party said it would not back the nomination of Kikuo Iwata to serve as the Bank of Japan's deputy governor.

Iwata, along with the nominee for governor Haruhiko Kuroda, is a strong supporter of giving more control of the BoJ to the government, and is also an advocate of further aggressive monetary easing.

The dollar gained to 96.14 yen from 96.05 yen late Tuesday, while the euro rose to $1.2453 yen from 1.2344.

The British pound edged higher to $1.4922 from $1.4903, while the dollar rose to 0.9525 Swiss francs from 0.9468 francs.

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Euro gains after ECB rates unchanged

THE euro strengthened against other major currencies on Thursday after the European Central Bank decided not to cut interest rates.

At 2200 GMT (0900 AEDT) the euro was trading at $1.3107, up from $1.2971 late on Wednesday. The euro also rose sharply against the Japanese yen, trading at 124.28 yen, up from 122.00 yen late on Wednesday.

As expected, the ECB decided to leave its interest rates unchanged at 0.75 per cent, its lowest level in history.

However, ECB chief Mario Draghi told a news conference that the bank weighed possibly cutting rates further before deciding on the status-quo move.

"Yes, we discussed the possibility of doing it. But the prevailing consensus was to leave rates unchanged," Draghi said.

With inflation in the 17-country eurozone currently expected to remain in line with the ECB's goal of close to, but just under, 2.0 per cent, "this will allow our monetary policy stance to remain accommodative," Draghi said.

The bank president offered a somewhat hopeful appraisal of the economy, predicting that economic activity would "gradually recover" later in 2013.

At the same time, the ECB released projections that showed the eurozone economy contracting by 0.5 per cent in 2013 before recovering to grow by 1.0 per cent next year.

The previous forecasts in December penciled in a contraction of 0.3 per cent this year and growth of 1.2 per cent in 2014.

In spite of Draghi's comments, "there is little hard evidence to support Mr Draghi's optimism," observed BK Asset Management managing director Boris Schlossberg.

Schlossberg said the euro's strength against the dollar "may prove to be fleeting if the the eurozone economic data does not show some signs of improvement relatively soon."

David Song, currency analyst at DailyFX, said the dollar could see renewed strength with Friday's release of the monthly nonfarm payrolls for February.

The data "may increase the appeal of the dollar as job growth is expected to pick up in February," Song said.

The dollar gained against the Japanese yen, trading at 94.83 yen late on Thursday, up from 94.04 late Wednesday.

The pound lost ground to the dollar, trading at $1.5012 on Thursday from $1.5017 on Wednesday.

The dollar traded lower to the Swiss franc, trading at 0.9425 Swiss francs, compared with 0.9482 a day earlier.

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