Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

FOREX-Kiwi sets 1-year high, buoyed by lack of bigger RBNZ easing

Published 11/08/2016, 02:44 pm
Updated 11/08/2016, 02:50 pm
© Reuters.  FOREX-Kiwi sets 1-year high, buoyed by lack of bigger RBNZ easing

* NZ dollar hits highest level since May 2015

* RBNZ cuts interest rates by 25 basis points as expected

* Kiwi jumps as some were betting on 50 basis point cut

* U.S. dollar index nurses losses, hovers near 1-week low (Updates prices, adds comments)

By Masayuki Kitano

SINGAPORE, Aug 11 (Reuters) - The New Zealand dollar surged to its highest level in more than a year on Thursday after the Reserve Bank of New Zealand cut interest rates as expected, disappointing some who had been betting on more aggressive easing.

The New Zealand dollar rose to as high as $0.7351, its highest level since May 2015, before settling back to stand at $0.7265 NZD=D3 , up 1.1 percent from late U.S. trade on Wednesday.

The Reserve Bank of New Zealand cut interest rates a quarter point to a record low of 2.0 percent on Thursday and flagged the need for more cuts as it struggles to head off deflation risks. kiwi jumped as there had been some speculation that it might cut interest rates by 50 basis points, said Steven Dooley, currency strategist for Western Union Business Solutions in Melbourne.

Along with the Australian dollar, the kiwi has been buoyed by the allure of its relatively high bond yields.

"At the moment we're really in a super-charged market when it comes to high-yielding currencies... Everyone's looking for an opportunity to buy," Dooley said.

New Zealand dollar 10-year government bonds NZ10YT=RR have a yield of around 2.1 percent, compared with negative yields in Japan and Germany.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Currency markets broader focus remained on whether the Federal Reserve will raise U.S. interest rates this year, with investors looking ahead for clues from Fed Chair Janet Yellen's speech on Aug. 26 at the U.S. central bank's annual symposium in Jackson Hole, Wyoming.

The dollar index, which measures the greenback's value against a basket of six major currencies, last traded at 95.691 .DXY =USD , holding within sight of a near one-week low of 95.442 set on Wednesday.

The euro held steady at $1.1172 EUR= , having gained 0.7 percent so far this week.

Against the yen, the dollar edged up 0.2 percent to 101.41 yen JPY= in holiday-thinned trade, with Japanese markets closed on Thursday for a public holiday.

The greenback had risen to as high as 102.66 yen on Monday, in the wake of last Friday's strong U.S. jobs data, but has since lost momentum.

One factor that has helped support the yen and weighed on the dollar recently is Japan's trade surplus, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

"Yen-buying has been increasing because of an improvement in the (Japanese) trade balance," Okagawa said.

Japan recorded a trade surplus of 1.8 trillion yen in the first half of 2016, after posting deficit of nearly 1.1 trillion yen in the second half of 2015, according to Japanese finance ministry data released in late July.

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.