The New Zealand dollar gave back part of its Thursday advance in Asian trading Friday after the Reserve Bank of New Zealand (RBNZ) held rates, while broader U.S. dollar weakness softened the move, FXStreet reported.
FXStreet put NZD/USD between $0.5625 and $0.5630 at 01:14 UTC Friday (9:14 p.m. ET Thursday), after the pair surrendered some of its previous session's gain. The RBNZ's Monetary Policy Committee kept its Official Cash Rate at 2.75% on Oct. 28, a decision EconoTimes previously covered in its report on the kiwi’s decline.
The RBNZ's Monetary Policy Committee kept its Official Cash Rate at 2.75% on Oct. 28. Four members supported holding the rate to assess the impact of two recent increases; three favored lifting it by 25 basis points to 3%. The majority pointed to lower-than-expected inflation and risks to the recovery. The dissenters emphasized core inflation and the possibility that higher freight and shipping costs could prolong price pressures. The committee left room for another increase, tied to how the economic outlook develops.
Annual consumer-price inflation eased to 3.7% in New Zealand's September quarter from 4.1% in June. The RBNZ projected a rise to 4.4% in the December quarter, largely reflecting fuel prices. The bank said strong commodity prices, goods-export demand and tourism were helping export-exposed businesses, while weak household spending and subdued domestic demand were limiting some firms' ability to pass on higher costs.
Reuters reported that the U.S. dollar weakened against a basket of major currencies Thursday as Treasury yields fell after U.S. inflation data. U.S. Treasury figures showed the 10-year Treasury par yield at 4.98% on Oct. 29, down from 5.05% on Oct. 28.
U.S. real GDP grew at a 3.4% annual rate in the third quarter, after 2.2% in the second quarter, the Bureau of Economic Analysis (BEA) reported Thursday. The BEA also said September personal consumption expenditures (PCE) prices rose 3.6% from a year earlier; the core PCE price index increased 3.1%. The Federal Reserve held its target range at 3.75% to 4% on Oct. 28 in a 10-2 vote, with two policymakers favoring a quarter-point increase.
The RBNZ's next scheduled monetary-policy announcement is Dec. 9.
