By Swati Pandey
SYDNEY, Sept 22 (Reuters) - The New Zealand dollar was knocked off a two-week high on Thursday after the central bank left the door wide open for another cut this year, even though holding rates this month was widely expected.
The New Zealand dollar NZD=D4 briefly dropped to as low as$0.7316 in early trade after the Reserve Bank of New Zealand (RBNZ) maintained its easing bias despite solid activity in the labour market and the broader economy. was last down 0.14 percent at $0.7338. On Wednesday, it climbed to $0.7366, its highest since Sept.9 after the U.S. Federal Reserve left rates unchanged. kiwi is one of the best performing G10 currencies this year, having risen 7.5 percent. The currency's resilience is adding to downward pressure on inflation, another headache for the RBNZ.
"We're seeing a fairly tame response on the currency because of the fact that the RBNZ has already flagged that further easing is required. So that is not going to be a shock," said Tom Kennedy, Sydney-based economist at JP Morgan.
The Australian dollar AUD=D4 climbed to a two-week high of $0.7638 as the greenback slipped following the Fed meeting.
The antipodean currencies were also boosted by the Bank of Japan's recommitment to help lift its economy out of decades-long stagnation. are now looking at 77 U.S. cents as the next stop for the Aussie. It has breached that barrier several times in the last few months but fell back each time.
The Aussie was stronger on the kiwi AUDNZD=R , rising 0.3 percent for its sixth straight day of gains.
The Reserve Bank of Australia's new governor, Philip Lowe, appears before a parliamentary economics committee later in the day, his first official appearance as chief.
New Zealand government bonds 0#NZTSY= rose, sending yields around 5 ticks lower across the curve.
Australian government bond futures were higher as well, with the three-year bond contract YTTc1 up 1 tick at 98.42. The 10-year contract YTCc1 added 5 ticks to 97.91.