New Zealand dollar holds ground as RBNZ out-hawks Fed
SYDNEY, May 23 (Reuters) -The New Zealand currency held its ground on Thursday in the face of a firm U.S. dollar, as an unexpected rise in local retail sales further pushed out bets of rate cuts this year following strongly hawkish guidance from its central bank.
The kiwi dollar NZD=D3 rose 0.2% to $0.6107, having managed to hold steady overnight as the greenback made broad advances thanks to hawkish Federal Reserve minutes showing that "various participants" conveyed a willingness to tighten policy further to tame inflation.
The currency now faces resistance at the $0.6140 level after hitting a two-month high of $0.6152 a day earlier as the Reserve Bank of New Zealand signalled rate cuts were unlikely until late 2025 due tostubborn inflation.
The Australian dollar AUD=D3 had less luck and was last flat at $0.6619, after tumbling 0.7% overnight, not helped by lower commodity prices. It is now back in the recent trading range of $0.6465 and $0.6650.
Data released on Thursdayshowed that retail sales volumes in New Zealand rose 0.5% in the first quarter, countering expectations for a small drop, which most likely provided a boost to the economy after two quarters of contraction.
"Today's data is in the ballpark of our Q1 GDP forecast of 0.2% q/q, but if we had to pick a side, we'd say it presents some very modest upside risk to this," said Miles Workman, a senior economist at ANZ.
In line with the hawkish pricing for the Fed after the minutes, investors further reduced their expectations for an October rate cut in New Zealand to an implied probability of just 34% from 60% a day earlier, leaving November the most likely month for an easing.
The kiwi continued to gain on the Aussie as bets of diverging rate outlook between New Zealand and Australia unwound. The Australian dollar AUDNZD= fell 0.2% to NZ$1.0835, the lowest in two months, after a 0.7% fall overnight.
Reporting by Stella Qiu; Editing by Subhranshu Sahu
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
