NZ Dollar Falls Sharply After RBNZ's 50bp Rate Cut
06 Agosto 2019 - 10:12PM
RTTF2
The New Zealand dollar declined against its major counterparts
in the Asian session on Wednesday, as the Reserve Bank of New
Zealand surprised markets with a rate cut of 50 basis points to
underpin economic growth and revive inflation.
The Monetary Policy Committee of Reserve Bank of New Zealand
headed by Adrian Orr cut the official cash rate by 50 basis points
to 1.00 percent. Economists had forecast a quarter point
reduction.
The bank had earlier reduced the rate by 25 basis points in May,
which was the first cut in more than two years.
Policymakers said employment and inflation would likely ease
relative to central bank's targets in the absence of additional
monetary stimulus.
"Our actions today demonstrate our ongoing commitment to ensure
inflation increases to the mid-point of the target range, and
employment remains around its maximum sustainable level," the bank
said in a statement.
The MPC noted that growth headwinds are rising. Further,
heightened uncertainty and falling global trade continued to weigh
on growth of trading partners.
The kiwi was trading mixed against its major counterparts on
Tuesday. While it rose against the yen and the aussie, it was
steady against the greenback and the euro.
The kiwi fell below the key 0.64 level against the greenback,
touching more than a 3-1/2-year low of 0.6377. The kiwi is seen
finding support around the 0.62 region.
The kiwi declined to a 6-1/2-year low of 67.58 against the yen
from yesterday's closing value of 69.46. Next key support level for
the kiwi is seen around the 64.00 level.
The NZ currency depreciated to more than a 9-month low of 1.7574
against the euro, down from Tuesday's New York session close of
1.7155. Should the kiwi extends decline, 1.80 is possibly seen as
its next support level.
The kiwi dropped to a 4-week low of 1.0496 against the aussie,
compared to 1.0354 hit late New York Tuesday. The kiwi is likely to
face support around the 1.06 region.
Survey from the Australian Industry Group showed that Australia
construction sector contracted at the steepest rate in six years in
July.
The Performance of Construction Index dropped to 39.1 in July
from 43.0 in June. Any reading below 50 indicates contraction in
the sector.
Looking ahead, U.K. Halifax house prices for July are due in the
European session.
In the New York session, U.S. consumer credit for June and
Canada Ivey PMI for July are scheduled for release.
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