The New Zealand dollar strengthened against the other major currencies in the Asian session on Wednesday after Reserve Bank of New Zealand Governor Graeme Wheeler signaled that it is inappropriate to cut rate in response to low inflation.
Speaking to the Canterbury Employers’ Chamber of Commerce in Christchurch, Wheeler said that it would be inappropriate to attempt to offset the low oil price effect through the OCR.
“If concerns deepen around the prospects for the global economy and its impact on New Zealand, some further policy easing may be needed over the coming year,” he said.
He also said that the bank will take longer to reach its 1-3 percent target than previously expected.
The currency rose earlier after data showed that the nation’s unemployment rate fell more than expected in the fourth quarter of 2015.
Data from Statistics New Zealand showed that the unemployment rate in New Zealand was a seasonally adjusted 5.3 percent in the fourth quarter of 2015. That beat forecasts for 6.1 percent, and it dropped from 6.0 percent in the third quarter. It also marked the lowest rate since March 2009.
Tuesday, the NZ dollar showed mixed trading against its major rivals. While the NZ dollar fell against the yen and the euro, it rose against the Australian dollar. Against the U.S. dollar, the kiwi held steady.
In the Asian trading, the NZ dollar rose to nearly a 2-week high of 1.0722 against the Australian dollar, from yesterday’s closing value of 1.0801. If the kiwi extends its uptrend, it is likely to find resistance around the 1.06 area.
Against the U.S. dollar, the yen and the euro, the kiwi edged up to 0.6545, 78.39 and 1.6692 from yesterday’s closing quotes of 0.6513, 78.13 and 1.6755, respectively. On the upside, 0.67 against the greenback, 80.00 against the yen and 1.64 against the euro are seen as the next resistance levels for the kiwi.
Looking ahead, Japan consumer confidence index for January is due to be released at 12:00 am ET.
Final service sector and composite PMI reports from major European economies for January and Eurozone retail sales data for December are slated for release later in the day.
In the New York session, ADP U.S. private sector jobs data, Markit’s final U.S. service sector PMI and ISM non-manufacturing PMI, all for January, and U.S. crude oil inventories data are set to be published.
At 9:15 am ET, Bank of England’s Chief Executive Officer of the Prudential Regulation Authority Andrew Baile is expected to testify in the Treasury Select Committee Hearing in London.
The material has been provided by InstaForex Company – www.instaforex.com