After a dramatic start with the New Zealand interest rate decision, markets settled down with the yen making slight gains on the day. The RBNZ overnight call rate decision got things rolling today with an expected hike of 0.25% to put the rate at a healthy 3.00%, however, the statements that followed put the Kiwi dollar into a tailspin. The RBNZ Governor Alan Bollard’s commentary that followed the rate announcement was more dovish than anticipated, as he questioned the “pace and extent of further rate increases….” Governor Bollard also talked down his currency by stating that its current appreciation is, “inconsistent with the softening in New Zealand’s economic outlook…” Needless to say, the NZD/USD dove from the 0.7280 level to lows just at the 0.7200 figure. The kiwi dollar has been trying to claw its way back to the 0.7280 mark ever since. AUD/NZD saw no such respite for the kiwi dollar as the pair launched from 1.2250 to 1.2370 in mere minutes and continued on to later highs nearer to 1.2390. The Aussie dollar made moderate 70 pip gains against the dollar as it tapped 0.8970 highs late in the session.
The Euro traded aimlessly against the greenback for the session, with EUR/USD well within a 1.3010 and 1.2970 range. The story was a similar one against the yen, as the European currency dipped to 113.20 lows after earlier levels near 113.70. Today’s trading recipe theme seemed to enjoy a dash of risk aversion, favoring the yen as the dollar was dented by gossip that US Treasury yields would continue to decline in the face of concerns that the American economy is stalling. Investors tend to bail out of riskier, higher yielding equities in favor of the safety of treasuries in times of uncertainty. This phenomenon helped to see the yen extend gains against the greenback to 87.10, the move stalling in the face of strong support just near the 87.00 big figure.
Later in the US, Unemployment claims data holds the spotlight while Asia will wrap up the week tomorrow with a slew of Japanese data including PMI, CPI, unemployment rate and industrial production data.