Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Dollar Up, New Zealand Dollar Eases After Smaller-Than-Expected RBNZ Rate Hike

Published 11/23/2021, 11:21 PM
Updated 11/23/2021, 11:24 PM
© Reuters.

© Reuters.

By Gina Lee

Investing.com – The dollar was up on Wednesday morning in Asia, paused after a surge following Jerome Powell’s re-appointment as U.S. Federal Reserve Chairman. The New Zealand dollar eased after a smaller-than-expected rate hike from the Reserve Bank of New Zealand (RBNZ).

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.08% to 96.573 by 11:87 PM ET (4:18 AM GMT).

The USD/JPY pair edged down 0.11% to 115. The dollar hit a more-than-four-year high against the yen on Tuesday after two-year Treasury yields surged to their highest levels since March 2020, and Fed funds futures also priced a chance of three rate hikes in 2022.

The AUD/USD pair was down 0.32% to 0.7204 and the NZD/USD pair fell 0.63% to 0.6904.

The USD/CNY pair inched up 0.02% to 6.3920 while the GBP/USD pair inched down 0.01% to 1.3373.

RBNZ hiked its interest rate to 0.75% and raised its long-term cash rate projection by 50 bps as it handed down its policy decision earlier in the day, with the New Zealand dollar falling as far as 0.5% to $0.6915.

Investors had expected a bigger hike and long-term cash rate projection from the central bank, and interest rate swaps reversed sharply afterward.

“The unwind aggressive expectations might be a blueprint for other markets that have become similarly positioned, but in the meantime, the New Zealand dollar could be on the ropes against a rising dollar,” Westpac strategist Imre Speizer told Reuters.

"If it fell below $0.69, I think we're in danger of going below $0.68," he said.

The greenback hit its highest levels in 2021, with bets increasing that the Fed will hike interest rates sooner than expected in response to continuous inflationary pressures. Powell is also perceived to respond sooner and harder to inflation than Lael Brainard, who was also in the running to head the U.S. central bank.

The U.S. will release data, including the minutes from the Fed’s latest meeting, GDP, and initial jobless claims, on Wednesday ahead of a holiday on Thursday.

Across the Atlantic, the Turkish lira fell more than 11% in one session overnight. The lira’s collapse could lead to further capital outflows and potentially put pressure on emerging market currencies globally.

Latest comments

ganchimeg
The RBNZ delivered the "expected" 25bps rate increase. This article is very misleading.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.