Dollar steady against euro, kiwi rallies after rate hike

Shutterstock photo - - The dollar was steady close to four-month highs against the euro on Thursday, while the New Zealand dollar rallied more than 1.5% after the Reserve Bank hiked rates and indicated that borrowing costs would rise again this year.

EUR/USD was steady at 1.3533, not far from the four-month low of 1.3502 set last Thursday.

The euro has weakened broadly since the European Central Bank cut all its main rates to record lows last Thursday and imposed negative deposit rates on commercial lenders for the first time, in a bid to stave off the risk of deflation in the euro zone.

The single currency showed little reaction after official data showed that industrial production in the region rose 0.8% in April, ahead of forecasts for a 0.4% increase.

Elsewhere, the dollar was little changed against the yen, with USD/JPY at 102.06, holding above the more than one-week low of 101.85 struck in the previous session.

The yen remained supported after the World Bank cut its forecast for global economic growth to 2.8% for the year from 3.2% in January on Wednesday, warning that an unusually harsh winter along with the conflict in Ukraine would act as a drag on growth.

The pound was close one-week highs against the dollar, with GBP/USD up 0.23% to 1.6826 after an upbeat U.K. jobs report on Wednesday bolstered expectations that the Bank of England will hike rates sooner than expected.

USD/CHF was little changed at 0.8996, while USD/CAD was steady at 1.0862.

The New Zealand dollar surged, with NZD/USD advancing 1.62% to 0.8673 after the country's central bank raised its benchmark interest rate to a five-year high of 3.25% and indicated that rates would rise again as strong economic growth fuels inflation pressures.

"The speed and extent to which the OCR (official cash rate) will need to rise will depend on the future economic and financial data, and its implications for inflationary pressures," RBNZ Governor Graeme Wheeler said in a statement.

AUD/USD was up 0.23% to 0.9402. The Aussie's gains were held in check after data on Thursday showed that the domestic economy shed 4,800 jobs in May, compared to expectations for jobs growth of 10,000. The jobless rate remained steady at 5.8%.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 80.79. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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