NZ Dollar Falls On RBNZ Dovish Signal
July 09 2024 - 10:51PM
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The New Zealand dollar weakened against other major currencies
in the Asian session on Wednesday, as market spurred bets on early
policy easing after the central bank viewed that inflation would
return to target during the second half of this year.
The Reserve Bank of New Zealand maintained its benchmark rate as
widely expected and softened its hawkish stance as inflation is
forecast to return to the target range over the second half of the
year. The Monetary Policy Committee of the Reserve Bank of New
Zealand decided to hold the Official Cash Rate at 5.50 percent.
In other economic news, the data from the National Bureau of
Statistics showed that China's consumer prices increased less than
expected in June and producer prices continued to decline. The
consumer price index logged an annual increase of 0.2 percent in
June, following a 0.3 percent gain in May. Prices were forecast to
climb 0.4 percent.
On a monthly basis, consumer prices dropped 0.2 percent after
easing 0.1 percent in May.
Core inflation that excludes prices of food and energy rose 0.6
percent annually, the same rate as seen in May.
Traders are digesting U.S. Fed Chair Jerome Powell's testimony
before the Senate Banking Committee. They also look ahead to the
report on U.S. consumer price inflation in the month of June on
Thursday for further clues on interest rates.
Powell told the committee that more good data would strengthen
the central bank's confidence inflation is moving sustainably
toward its 2 percent target and lead to a potential interest rate
cut. Powell said, "Reducing policy restraint too late or too little
could unduly weaken economic activity and employment."
In the Asian trading today, the NZ dollar fell to nearly a
1-1/2-year low of 1.1092 against the Australian dollar, and nearly
a 2-month low of 1.7801 against the euro from yesterday's closing
quotes of 1.1000 and 1.7646, respectively. If the kiwi extends its
downtrend, it is likely to find support around 1.11 against the
aussie and 1.81 against the euro.
Against the U.S. dollar, the kiwi slid to a 1-week low of 0.6075
from Tuesday's closing value of 0.6123. The NZD/USD pair test
support near the 0.59 region.
The kiwi dropped to a 5-day low of 98.13 against the yen, from
an early 2-day high of 99.04. On the downside, 95.00 is seen as the
next support level for the kiwi.
Looking ahead, U.S. MBA mortgage approvals data, U.S. wholesale
inventories data for May and U.S. EIA weekly crude oil data are due
to be released in the New York session.
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