The New Zealand dollar surged Wednesday against its U.S. counterpart while the greenback was steadily higher against the euro and the safe-haven yen.
The New Zealand dollar surged to as high as $0.6740 and ¥83.31
before stabilizing at $0.6691 and ¥82.7399 midday.
Investors took comments by Reserve Bank of New Zealand Governor Graeme Wheeler as not being so dovish, which drove a covering of short positions.
Wheeler said Wednesday in a speech on monetary policy that a weaker NZD would be consistent with current economic conditions. He dismissed expectations of large declines in interest rates because that would be consistent with the economy moving into recession.
The recent China drop and decline in Japanese shares spurred demand for safe-haven yen.
“There aren’t any trading cues in particular given the slight move in China stocks,” said Daiwa Securities senior FX strategist Yukio Ishizuki.
The greenback was steady against the euro and the yen with EUR/USD at 1.1046, 0.13% lower and USD/JPY at 123.61, higher 0.03%.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen was off 0.7 percent, while the Shanghai Composite slipped 1 percent.
Japan's Nikkei eased 0.3 percent, hit by sharp falls in Fanuc Corp and Tokyo Electron.
Elsewhere, investors expect the Fed to to point to a growing U.S. economy and stronger job market later in the day, as it sets the stage for a possible interest rate hike in September.
The U.S. central bank is scheduled to issue its latest policy statement at 2 p.m. EDT following a two-day meeting, signaling how policymakers feel the economy has progressed since they last met in June.
