On a rather bold move, the Reserve Bank of New Zealand caught traders off guard yesterday on its announcements. The kiwi quickly jumped to levels near 1% against the US dollar and other currencies on Wednesday’s trading.
The NZD USD trading pair took the main spotlight among the kiwi’s forex pairs. The pair surged 0.94% or 0.0060 points in yesterday’s trading sessions, peaking ranges from $0.6330 to $0.6416.
The kiwi also rose against the yuan, yen, and Australian dollar during Wednesday’s trading. All of them reached beyond 1% and eased down to just below it.
NZD bulls were delighted by the news and the gains from the announcement of the Reserve Bank of New Zealand.
A forex analyst said that the NZD USD pair is bound to hit its resistance soon. In past sessions, the pair was seen bouncing from its support as the greenback is unable to drag the kiwi lower.
Still, some traders are hoping that the strengthening USD will be able to hold itself against the NZD.
Yesterday, the Reserve Bank of New Zealand confidently said that there is no urgency for it to ease rates. The official cash rate or OCR of the bank still stands at 1% as of yesterday’s decision, the lowest yet.
Prior to the announcement, the market expected a 25-basis-point cut to 0.75% from the reserve bank. However, some experts are still waiting for further easing from the bank before the year ends.
According to an expert, the Reserve Bank of New Zealand is the most aggressive among all central banks this 2019.
The RBNZ Governor Adrian Orr first delivered a 0.25% reduction in the OCR in May this year. He then followed the move in August when he brought a 0.5% cut.
After that, traders expected the third one coming but based on New Zealand’s economic performance; there was no need yet.
Wellington’s consumer price index rose in the third quarter of the year to 1.5% at an annual rate. The result came in slightly better from expectations of 1.4% expansion.
New Zealand’s inflation is still stable this year, reaching an average of 1.57% after the third quarter’s data.