NZ Dollar Extends Slide On Surprise RBNZ Rate Cut
The New Zealand dollar weakened against the other major currencies in the Asian session on Thursday after the Reserve Bank of New Zealand lowered its Official Cash Rate to a fresh record low and signaled further easing.
The RBNZ trimmed its Official Cash Rate by 25 basis points, lowering the benchmark to 2.25 percent from 2.50 percent. This came as a surprise since most forecasts anticipated no change to the OCR.
The OCR falls to a fresh record low as the country deals with continued economic slowdown.
"Further policy easing may be required to ensure that future average inflation settles near the middle of the target range", RBNZ Governor Graeme Wheeler said in a statement.
"Monetary policy will continue to be accommodative", he added.
Meanwhile, traders expect additional stimulus from the European Central Bank, which is scheduled to announce its monetary policy verdict later in the day in Brussels.
Wednesday, the NZ dollar fell against its major rivals. The NZ dollar fell 1.34 percent against the U.S. dollar, 0.73 percent against the yen, 1.20 percent against the euro and 2.06 percent against the Australian dollar.
In the Asian trading, the NZ dollar fell to nearly a 6-month low of 1.1277 against the Australian dollar, from yesterday's closing value of 1.1246. If the kiwi extends its downtrend, it is likely to find its support around the 1.14 region.
Against the euro, the yen and the U.S. dollar, the kiwi dropped to a 10-day low of 1.6588, a 9-day low of 75.01 and an 8-day low of 0.6619 from yesterday's closing quotes of 1.6519, 75.38 and 0.6652, respectively. The kiwi may test support near 1.69 against the euro, 73.00 against the yen and 0.65 against the greenback.
Looking ahead, the German trade balance for January is due to be released in the pre-European session at 2:00 am ET.
The European Central bank will announce its interest rate decision at 7:45 am ET. Economists expect the bank to cut its deposit rate to -0.40 percent from -0.30 percent.
Following the announcement, European Central Bank President Mario Draghi will hold the customary post-meeting press conference.
In the New York session, Canada housing price index for January and U.S. weekly jobless claims for the week ended March 5 are slated for release.
At 2:00 pm ET, U.S. Federal budget balance for February is set to be published.
At 4:15 pm ET, Bank of Canada Governor Stephen Poloz is expected to speak at the Institute for Advanced Research in Ottawa.
The material has been provided by InstaForex Company - www.instaforex.com
