Kiwi Lifted By Positive RBNZ Growth Outlook, Oil Prices Deteriorate

The New Zealand dollar jumped after the Reserve Bank of New Zealand said the country’s growth outlook remained positive. Sterling held onto gains after the hawkish comments from Bank of England’s Andrew Haldane. Oil prices hovered near 10-month lows on over-supply concerns.

The RBNZ held a policy meeting today and announced its decision to keep its benchmark interest rate at the record low of 1.75%. The central bank maintained its neutral policy stance and had an overall positive tone. It indicated that it was confident it has the right policy stance to fulfill its mandate. This was supportive for the kiwi, which rose against the greenback to as high as $0.7276 in early Asian session trading before steadying around $0.7255.

The British pound was one of the top performing major currencies yesterday after the BoE’s policy member and chief economist Andrew Haldane made comments that contrasted BoE Governor Mark Carney’s dovishness. Haldane said the risks of leaving policy tightening too late are rising. This boosted sterling to rise above the key $1.2700 level on Wednesday, before steadying to trade around $1.2670.

The greenback fell against the yen for a third straight day. After briefly dropping to 110.94 in Asia today, the pair traded to around 111.15 yen. The narrowing yield differential between US and Japanese bond yields and falling oil prices are weighing on the US currency. The dollar index was down to last trade at 97.49, moving off a 1-month high of 97.87 hit on Tuesday.

Oil prices wallow in a bear market on concerns that the recent OPEC deal to cut production has not been effective in dealing with the supply glut. WTI oil fell by over $1.00 to touch a low of $42.05 a barrel on Wednesday while Brent crude entered a bear market as well yesterday after falling below $45 a barrel for the first time since November. Both benchmarks consolidated losses in Asia today.

Gold benefitted from a weaker dollar and rose to as high as $1254.65 an ounce, moving off a 5-week low of $1240.79 touched yesterday.

Looking ahead to the rest of the day, a speech by FOMC member Jerome Powell would be important to watch. In terms of economic data, US jobless claims and Canadian retail sales will be released during the US session. Ahead of these reports, the CBI industrial order expectations are due out of the UK.

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