* Kiwi rallies after NZ central bank signals more rate hikes
* Euro awaits speech by head of ECB, German IFO
* Yen firm as Tokyo shares slip on lack of US-Japan trade
(Recasts, adds comments)
By Anirban Nag
LONDON, April 24 The euro struggled to make
headway on Thursday amid caution before a speech by ECB
President Mario Draghi, while the New Zealand dollar rose after
the central bank raised interest rates and signalled more
After two days of gains, the euro was steady at $1.3825
, leaving it a shade firmer on the week. It could take
some cues from the German Ifo survey due at 0800 GMT,
but most of the focus will be on Draghi's speech, scheduled for
On Wednesday a survey showed the euro zone private sector
started the second quarter on its strongest footing since 2011.
But hedge funds and speculators are betting against the euro
as Draghi has warned the European Central Bank will ease policy
further if the currency keeps strengthening, including the
option of quantitative easing.
Other members of the ECB's Governing Council have also been
vocal about the need to rein in euro strength, which has
contributed to subdued inflation in the euro zone.
"The upcoming speeches by President Draghi and his Governing
Council members (Klaas) Knot and (Vitor) Constancio today and
tomorrow could highlight the ECB's determination to fight low
inflation and, by implication, further euro appreciation," said
Valentin Marinov, currency strategist at Citi.
"All that could keep euro bulls at bay for now."
There have been other factors behind the euro's strength,
including renewed inflows into euro zone peripheral bonds and
stocks; and the fact that euro zone banks are repaying cheaper
loans to the ECB, shrinking its balance sheet at a time when the
Federal Reserve and the Bank of Japan are expanding theirs.
Also, many euro zone banks have been cutting their presence
abroad, selling assets and repatriating money to meet capital
and stress test requirements. The capital inflows allow the euro
zone to maintain a healthy current account balance and support
the common currency.
The New Zealand dollar climbed to a one-week high of $0.8638
after the country's central bank said it would continue
to tighten policy to stay on top of inflationary pressures. As
expected, it hiked its cash rate to 3.0 percent from 2.75
Some in the market had thought it might signal a slowing in
the pace of future rate hikes given a stubbornly strong currency
and still moderate inflation. Still, analysts said further gains
in the kiwi might be limited.
"We believe further NZD appreciation is likely to be capped
within a cent of current rates as the tightening cycle is fairly
priced," said Annette Beacher, head of Asia-Pacific research at
TD Securities in Singapore.
The New Zealand dollar last traded at $0.8620, up 0.4
percent on the day.
The safe-haven yen rose against the dollar as Tokyo shares
fell nearly 1 percent, after Japanese Prime Minister
Shinzo Abe said that a trade deal with the United States had not
been finalised yet.
Mollifying Japan's powerful farming lobby and completing a
successful trade pact is seen as a key test of whether Abe can
deliver the "third arrow" - structural reform - to go with two
others that have already been deployed: fiscal and monetary
The dollar last fetched 102.35 yen, down 0.2 percent.
(Additional reporting by Masayuki Kitano; Editing by John