On Wednesday, the New Zealand currency dropped. The negative jobs growth stirred the NZ dollar down. In addition to that, the anticipation for an interest cut heightened. Though worldwide investors are waiting to hear from Federal Reserve Chairman Jerome Powell. They expect Powell to deliver the news after the end of a two-day policy meeting.
Trading weakened when large parts of Asia and Europe are off on holiday. Furthermore, trading of most currency pairs is within tight spans.
A Fed meeting occurs after the dollar rose to a two-year high due to strong economic data last month.
As stated by Mizuho strategists, “The risk for this Fed meeting is that, unless the FOMC meets the market’s dovish expectation for their stance, we would expect another leg higher in USD.”
After measuring the dollar against a basket of currencies, it barely changed at 97.460.
On the other hand, the euro is going $1.1224, an inch higher than the dollar. Similar to dollar, euro surged after a strong economic growth data out of the eurozone on Tuesday. Also, it assisted some short coverings from hedge funds who have been risking big towards the single currency in recent weeks.
NZ dollar declined half percent after the sudden employment drop in the March Quarter. Rate of the jobless changed to 4.2 percent. Today, the NZ dollar is the big mover of the day.
Interest Rate Cut
The chance of a rate cut from the Reserve Bank of New Zealand is lowered further by the Markets’ response. Though they declared that the next move was likely to be down. Also, the policy meeting of RBNZ will be next week.
As written by MUFG analysts, “The RNBZ appears to be ahead of other G10 central banks in shifting to a more dovish policy stance.”
The kiwi fell 0.4 percent at $0.6649 at 0720 GMT.
“This adjustment should continue to keep the kiwi under downward pressure in the near-term,” analysts added.
Due to the instability of its neighbor, the Australian dollar slightly rose, trading at $0.70525.