The release of the Reserve Bank of New Zealand’s inflation report which showed inflation likely diving in the future weighed heavily on the New Zealand Dollar against its major peers. Also weighing on the Kiwi Dollar is the recent tumble in commodity, and especially oil, prices which have dented both demand and growth expectations in China, which is a major trading partner for the New Zealand economy. Other commodity-based currencies such as the Australia and Canadian Dollars have also been under pressure as a result of the oil price decline.
As reported at 9:04 am (GMT) in London, the NZD/USD was trading at $0.7450, a loss of nearly 1% in the day’s trading; meanwhile the AUD/USD was also lower at $0.7753, a drop of 0.62%, while the USD/CAD pair was higher at C$0.7911, a gain of 0.55% for the greenback.
Yellen Testimony Looms
Ahead, markets will turn their attention to the US and US Senate testimony from Janet Yellen, the Federal Reserve Bank Chairman. Investors are hopeful that Yellen will provide some clarity to the markets as regards an interest rate hike; the last release of the minutes from January’s policy meeting were surprisingly dovish which lowered investors’ expectations of an imminent rate hike. Some analysts believe that Yellen will make it clear that the Fed is ready to put through a rate hike which would lift Dollar demand.