New Zealand Dollar Soars After RBNZ Holds Rate, QE Steady
The New Zealand dollar that initially fell against its major
counterparts recovered immediately in the Asian session on
Wednesday, after the Reserve Bank of New Zealand left the main
interest rate and asset purchase programme unchanged, saying that
the current levels of monetary stimulus were required to support
The RBNZ maintained its Official Cash Rate at the record low of
0.25 percent, in line with expectations.
The MPC kept the Large Scale Asset Purchase (LSAP) Program of up
to NZ$100 billion and the Funding for Lending Program (FLP)
The Committee agreed that inflation and employment would likely
remain below its remit targets over the medium term in the absence
of prolonged monetary stimulus.
The Committee agreed to maintain its current stimulatory
monetary settings until it is confident that consumer price
inflation will be sustained at the 2 percent per annum target
midpoint, and that employment is at or above its maximum
sustainable level. Meeting these requirements will necessitate
considerable time and patience.
The Committee agreed that it remains prepared to provide
additional monetary stimulus if necessary and noted that the
operational work to enable the OCR to be taken negative if required
is now completed.
The kiwi strengthened to near a 2-year high of 1.6474 versus the
euro, after reaching as low as 1.6613 at 8:00 pm ET. The kiwi is
likely to find resistance around the 1.62 level.
Data from the Australian Bureau of Statistics showed that
Australia wage prices climbed 1.4 percent on year in the fourth
quarter of 2020 - exceeding expectations for an increase of 1.1
percent after the 1.4 percent gain in the previous three
Individually, private sector wages rose 1.4 percent and public
sector wages gained 1.6 percent.
The kiwi moved higher to near a 3-year high of 0.7384 versus the
greenback, following a low of 0.7314 set at 8:00 pm ET. If the kiwi
rises further, it may challenge resistance around the 0.76
The NZ currency was higher versus the yen, at more than a 2-year
high of 77.83. This followed a low of 77.07 seen at 8:00 pm ET. On
the upside, 82.00 is possibly seen as its next resistance
After having fallen to 1.0821 at 8:00 pm ET, the kiwi turned
higher against the aussie, touching an 8-day high of 1.0732. Next
key resistance for the kiwi is seen around the 1.06 level.
Looking ahead, Swiss economic sentiment index for February is
set for release in the European session.
U.S. new home sales for January will be published in the New
At 10:00 am ET, Federal Reserve Chair Jerome Powell is due to
testify on the Semiannual Monetary Policy Report before the House
Financial Services Committee, in Washington DC.