The New Zealand dollar weakened against the other major currencies in the Asian session on Thursday, as the Reserve Bank of New Zealand’s monetary policy announcement signaled possibility of more rate cuts this year.
The Reserve Bank of New Zealand held its Official Cash Rate steady at 2.50 percent. That was in line with expectations after the bank had cut the rate by 25 basis points at its December meeting.
The RBNZ added that further easing may be appropriate, depending on the results of forthcoming economic data.
RBNZ Governor Graeme Wheeler said in the statement that more easing may be needed due to low inflation.
Prior to the RBNZ announcement, the currency was lower as Fonterra cut its forecast payout.
Fonterra Cooperative Group lowered its farmgate milk payout forecast by 45 cents to $4.15 per kilogram of milk solids, following rival processors Open Country Dairy and Westland Milk Products signaling lower returns.
In other economic news, data from the Statistics New Zealand showed that New Zealand had a merchandise trade deficit of NZ$53 million in December. That topped forecasts for a shortfall of NZ$131 million following the NZ$779 million deficit in November.
Exports were up 0.6 percent to NZ$4.43 billion, while imports slid 2.6 percent to NZ$4.48 billion.
In the early Asian trading, the NZ dollar fell to 6-day lows of 0.6417 against the U.S. dollar and 1.7007 against the euro, from early 2-day highs of 0.6531 and 1.6642, respectively. Thereafter, the currency held steady against both the currencies.
Against the yen, the kiwi dropped to 76.05 from an early 2-week high of 77.67 and held steady thereafter.
The kiwi slipped to nearly a 2-month low of 1.0935 against the Australian dollar, from yesterday’s closing value of 1.0918. If the kiwi extends its downtrend, it is likely to find support around the 1.10 area.
Looking ahead, the German import price index for December is due to be released in the pre-European session at 2:00 am ET.
Fourth quarter U.K. GDP data, U.K. index of services for November and Eurozone business climate index for January are slated for release later in the day.
In the New York session, preliminary German inflation data for January, U.S. weekly jobless claims for the week ended January 23 and U.S. durable goods orders and pending home sales data, both for December, are set to be published.
At 1:00 pm ET, German Bundesbank President Jens Weidmann is expected to speak at the Internationaler Club La Redoute in Bonn, Germany.
The material has been provided by InstaForex Company – www.instaforex.com