The New Zealand dollar declined against its US counterpart today as traders thought that the greenback’s decline last week was overdone. The kiwi was also weak against its other major peers.
The US Federal Reserve shocked markets last week by trimming its forecast for monetary tightening, promising just two interest rate hikes this year instead of the previous prediction of four. The announcement led to a crash of the US currency, but it has started recovering by the weekend and continued to do so today, putting pressure on other currencies.
As for New Zealand fundamentals, they were not particularly good. The Westpac McDermott Miller Consumer Confidence Index dropped to 109.6 in March from 110.7 in December. The Reserve Bank of New Zealand made a surprise interest rate cut earlier this month, seriously reducing the appeal of the NZ dollar.
NZD/USD dropped from 0.6787 to 0.6755 as of 16:33 GMT today. NZD/JPY was down from 75.68 to 75.12 intraday but rebounded to trade at 75.41. EUR/NZD traded at 1.6641 after opening at 1.6589 and touching the daily high of 1.6697.
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