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Forex - Kiwi gains despite rate cut as investors note housing pressures

ForexJul 22, 2015 07:01PM ET
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NZD stronger despite rate cut - The New Zealand dollar gained on Thursday despite a rate cut by the central bank and the prospect of more to come as investors continue to see pressure from housing prices restraining monetary options.

NZD/USD traded at 0.6639, up 0.97%, after the Reserve Bank of New Zealand on Thursday cut its Official Cash Rate by 25 basis points to 3.00% and said further cuts are likely.

"House prices in Auckland continue to increase rapidly, but, outside Auckland, house price inflation generally remains low. Increased building activity is underway in the Auckland region, but it will take some time for the imbalances in the housing market to be corrected," Governor Graeme Wheeler said in a statement.

In Japan, June trade data is due at 0850 Tokyo time (2350 GMT). The forecast is for a trade surplus of ¥5.0 billion, the first surplus since ¥222.7 billion in March, which was the first positive balance in 33 months.

USD/JPY changed hands at 123.96, down 0.01%.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.05% at 97.57.

Overnight, the dollar pushed higher against a basket of other major currencies on Wednesday, as data showing that U.S. existing home sales hit the highest level since 2007 in June added to expectations for the Federal Reserve to raise interest rates in the coming months.

The National Association of Realtors reported on Wednesday that U.S. existing home sales increased by 3.2% to 5.49 million units last month from 5.32 million in May. Analysts had expected existing home sales to rise 1.2% to 5.40 million units in June.

The data came after Fed Chair Janet Yellen said last week that the Fed is likely to raise rates "at some point this year."

Sentiment on the euro remained vulnerable as the Greek parliament was set to vote later Wednesday on a second set of reforms needed to secure the country's bailout deal.

On Thursday in Asia, EUR/USD traded at 1.0927 before the vote.

If lawmakers approve the financial and judicial reforms, Greece will be able to press ahead with negotiations for an €86 billion bailout from its creditors.

Greece's next major deadline is Aug. 20, when it must pay €3.2 billion owed to the European Central Bank, followed by a payment of €1.5 billion to the International Monetary Fund in September.

Forex - Kiwi gains despite rate cut as investors note housing pressures

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