The Reserve Bank of New Zealand unexpectedly left its Official Cash Rate unchanged at 2.75 percent on Wednesday, defying market pricing that had pointed to a near-certain 25-basis-point hike. Four committee members, including Governor Anna Breman, preferred to hold.
Kiwi stalls near low
NZD/USD traded around 0.5630-0.5625 during the Asian session on Friday. The pair had touched a two-week low after the decision and was stalling a bounce from that level.
The hold overshadowed the central bank’s tightening bias.
Dollar under pressure
The US dollar has been under selling pressure for three straight days. Renewed hopes for US-Iran diplomacy, falling US bond yields, and a paring back of the geopolitical risk premium have all weighed on the currency.
An ongoing US-Iran standoff over the Strait of Hormuz, together with Houthi-Saudi hostilities, has kept crude oil prices elevated, a factor that supports Fed hawkishness. Traders see a 75 percent probability of a Fed rate hike in December, according to the CME FedWatch Tool.
US macro data released Thursday showed the economy accelerating, with Q3 growth running at 3.4 percent annualized, while inflation rose in September.
Related: OCBC sees won recovery room after BoK holds rate at 3% · Euro holds near 1.12 as traders weigh US inflation
Source: Reserve Bank of New Zealand
