Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

FOREX-Kiwi takes flight as New Zealand's central bank surprises by standing pat

Published 13/11/2019, 03:26
Updated 13/11/2019, 03:27
© Reuters.  FOREX-Kiwi takes flight as New Zealand's central bank surprises by standing pat

© Reuters. FOREX-Kiwi takes flight as New Zealand's central bank surprises by standing pat

* Kiwi soars after RBNZ dashes rate-cut expectations

* Dollar steady elsewhere near multi-week highs

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tom Westbrook

SINGAPORE, Nov 13 (Reuters) - The New Zealand dollar soared

1% on Wednesday after the country's central bank unexpectedly

left interest rates on hold, while most other currencies trod

water.

"It's flying. Massive surprise," said Imre Speizer, head of

New Zealand strategy at Westpac Bank in Auckland. "There's a lot

of position exiting going on."

Almost all analysts had forecast a cut in the 1% benchmark

rate to a record-low 0.75%, with futures markets having priced

in a better-than-75% chance of a cut as slack spending and a

global slowdown held New Zealand's economic growth at a six-year

The kiwi NZD zoomed almost a cent higher to $0.6403 after

the decision was announced, putting it on track for its steepest

daily gain in a year. Yields on two-year New Zealand bonds

NZ2YT=RR jumped by their most in more than two years.

The Reserve Bank of New Zealand said aggressive easing

earlier this year meant current settings were appropriate, but

left the door open for more stimulus. The kiwi later gave up some of its gains to settle around

$0.6395, and moves elsewhere in Asian hours were modest.

"It's all been about the New Zealand dollar," said

Commonwealth Bank FX analyst Joe Capurso.

Against other currencies, the U.S. dollar was only a touch

weaker after U.S. President Donald Trump said in a speech

overnight that a trade deal with China was "close," but failed

to provide any further details.

Hopes for an imminent deal to wind back tit-for-tat tariffs

the world's two largest economies have imposed on each other

have lifted the dollar 1% this week to a one-month high of

98.423 overnight against a basket of currencies .DXY .

It was a touch below that level in Asian trade, though moves

were slight as investors waited for more concrete news.

Trump's speech at the Economic Club of New York mostly

reprised well-worn criticism of the U.S. Federal Reserve for

failing to cut interest rates deeply enough and rhetoric about

China's "cheating" on trade. However his remark that a deal "could happen soon," was

enough to keep the dollar holding most of those recent gains.

"(It) was heavy on rhetoric and light on detail, leaving

markets none the wiser," National Australia Bank's senior FX

strategist Rodrigo Catril said in a note.

Against the Japanese yen JPY= the dollar was a touch

weaker at 108.93 yen - not far below the 5-1/2-month high of

109.48 yen it hit last week.

The dollar scaled a month-high against the euro EUR=

overnight and steadied near that level at $1.012 on Wednesday.

China's yuan weakened past the 7-per-dollar mark after the

speech and fell a little further to 7.0212 per dollar in onshore

trade on Wednesday CNY= .

The British pound GBP= was steady at $1.2850, after a

brief boost from the Brexit Party's decision not to contest

Conservative-held seats at December's election faded.

The Australian dollar AUD=D3 was pinned at $0.6837 by

weak, but largely inline, wages data.

Later on Wednesday, Fed Chairman Jerome Powell is due to

testify on the U.S. economic outlook before the congressional

Joint Economic Committee at 1600 GMT.

The first public hearings in Trump's impeachment inquiry

begin an hour earlier at 1500 GMT.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.