The New Zealand Dollar soared broadly during the Asian trading session following comments made by officials of the Reserve Bank of New Zealand which left no room for uncertainty that the central bank intends to hike interest rates further in the near future in an effort to stave off inflationary pressures. Also as analysts had widely expected, the RBNZ monetary policy decision announced today included an increase to the bank’s cash rate from 2.75% to 3.0%.
As reported at 11:53 a.m. (JST) in Tokyo, the NZD/USD climbed to $0.8637, gaining more than $0.4 before edging back and steadying at $0.8626, a gain of 0.4%; analysts expect additional gains are likely to be limited as expectations of the rate hike had already been factored into the pricing. The NZD/EUR also peaked at 0.6249 before falling back to 0.6227 still a gain of 0.1%.
Traders Wary of Euro Ahead of Draghi Speech
Meanwhile, in the Eurozone, FX players are awaiting today’s speech by ECB chief Mario Draghi who is likely to continue to take a decidedly dovish position despite economic news yesterday which showed an uptick in private sector activity in the second quarter. Draghi’s main focus, say analysts, is likely to be on the Euro’s appreciation which hampers export activity; markets want to see if Draghi will provide a firmer commitment on timing of possible easing.