The New Zealand dollar rose against the euro as Italian president Sergio Mattarella tried again to form a coalition government after rejecting a eurosceptic finance minister proposed by the 5-star Movement and the far-right League.
The kiwi dollar traded at 59.65 euro cents as at 8am in Wellington from 59.30 cents late yesterday. It fell to 69.35 US cents from 69.51 cents while the trade-weighted index was little changed at 72.88 from 72.86.
Italy's Mattarella tapped former IMF economist Carlo Cottarelli as interim prime minister and Cottarelli vowed to pull together a government ahead of fresh elections expected to be held later this year or early 2019. Italian government bonds fell, driving up yields, on concern Italy's political instability may lead to further volatility following inconclusive elections in March. Financial markets were relatively subdued with the US closed for the Memorial Day holiday and the UK on a bank holiday.
"The Italian political situation remains messy and saw the euro weaken further overnight," said Liz Kendall, senior economist at ANZ Bank New Zealand. "With holidays in both the UK and US, it was a reasonably quiet session for kiwi overnight."
With little economic news scheduled today, traders will watch for May consumer confidence data in Australia, unemployment figures in Japan and tonight, US May consumer confidence.
The kiwi dollar didn't move much yesterday after the government said it will try to eradicate the Mycoplasma bovis outbreak at a cost of $886 million over the next decade. That was cheaper than the $1.2 billion price tag of long-term management, although New Zealand would be the first country eradicate the disease if successful.
The kiwi increased to 91.93 Australian cents from 91.74 cents yesterday. It fell to 4.4370 yuan from 4.4424 yuan and traded at 52.09 British pence from 52.11 pence. The kiwi fell to 75.88 yen from 76.07 yen.