The New Zealand dollar surged to new highs after the Reserve Bank of New Zealand raised interest rates and signaled that further hikes this year are expected. The Australian dollar has also found support on the back of the announcement as high-interest currencies attract strong demand at the expense of the US dollar. The US dollar has also dropped to a two-year low against the Swiss franc as investors consider the Swissie a better safe have option given Washington’s involvement in the Ukrainian crisis which may still escalate. Ukraine warned last night that 80,000 Russian troops were massing on its borders and could invade. However, the US dollar could snap back following the US retail sales data ahead of next week’s critical Federal Reserve policy decision. The euro climbed to a two-and-a-half-year high against the US dollar and continues to attract investors relieved about last week’s European Central Bank announcement. The single currency has now put together five consecutive sessions of gains against the British pound after the ECB surprised many investors last week by not cutting interest rates.

Sterling

Sterling has slipped to a three-month low against the euro after weaker-than-expected UK house price data offered the UK currency little support against a bullish euro. The single currency has now put together five consecutive sessions of gains against the British pound after the ECB surprised many investors last week by not cutting interest rates.

US dollar

The US dollar tumbled to multi-month lows against the New Zealand dollar after the Reserve Bank of New Zealand raised interest rates as expected in its policy meeting. The greenback is also under pressure against the Swiss franc as investors consider the Swissie a better safe have option given Washington’s involvement in the Ukrainian crisis which may still escalate.

Euro

The euro climbed to a two-and-a-half-year high against the US dollar as the US currency came under pressure from several of its key rivals whilst the euro continues to attract investors relieved about last week’s ECB announcement. The single currency soared after President Mario Draghi last Thursday announced no new measures of monetary easing despite significantly low levels of inflation across the euro area. As more investors bet that economic conditions in the eurozone will continue to improve, the euro may extend its strong start to March. However, a number of ECB speakers are voicing their concerns about an overvalued currency.

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