The New Zealand dollar weakened against other major currencies in the Asian session on Wednesday, after the Reserve Bank of New Zealand (RBNZ) decided to cut its interest rate unexpectedly.
The Monetary Policy Committee of the Reserve Bank of New Zealand, led by Governor Adrian Orr, decided to cut the Official Cash Rate by 25 basis points to 5.25 percent. This was the first reduction since March 2020.
Although the bank seemed to strike a cautious tone about further policy easing, it is likely to cut rates more aggressively than many anticipate, Capital Economics economist Abhijit Surya said.
The markets bet for another rate cut at its next RBNZ policy meeting on October 9, 2024.
In the Asian trading today, the NZ dollar fell to a 2-day low of 0.6004 against the U.S. dollar, from an early near 4-week high of 0.6084. The NZD/USD pair may test support near the 0.58 region.
Against the euro and the Australian dollar, the kiwi dropped to a 1-week low of 1.8316 and a 2-week low of 1.1032 from yesterdays closing quotes of 1.8090 and 1.0920, respectively. If the kiwi extends its downtrend, it is likely to find support around 1.87 against the euro and1.13 against the aussie
The kiwi edged down to 88.00 against the yen, from yesterdays closing value of 89.32. The next possible downside target for the NZD/JPY pair is seen around the 83.00 region.
Looking ahead, U.K. house price data for June, Eurozone flash GDP data for the second quarter and industrial production figures for June are due to be released in the European session.
In the New York session, U.S. mortgage approvals data, U.S. CPI data for July and U.S. EIA crude oil data are slated for release.