After a surprise move by the Reserve Bank of New Zealand, the Kiwi Dollar plummeted against its rival, the US Dollar, losing more than 2.5% earlier and striking a fresh 5-year trough. The RBNZ governor, Graeme Wheeler, hinted at the possibility of further rate cuts in the future, and said that a reduction of the cash rate to 3.25% (from 3.50%) was justified despite some concerns from opponents.
As reported at 8:53 am (BDT) in London, the NZD/USD was trading lower at $0.7013, not far from the session trough of $0.6998; ahead of the rate cut announcement the pair was trading at $0.7064. The AUD/NZD is higher at 1.1030, a gain of 0.57%.
Traders Await Retail Sales
In the US, the Dollar was trading higher as FX traders await the release of retail sales figures in order to help gauge the possible timing of an interest rate hike from the Federal Reserve. Given the importance of the American consumer to the US economy, an upbeat release, i.e. one which exceeds analysts’ expectations, could provide support for the greenback. Currently, the US Dollar Index is trading higher at 94.999 .DXY, a gain of 0.37%.