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Forex - NZD/USD rises after RBNZ signals that rates will increase

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Forex Pros - The New Zealand dollar rose against its U.S. counterpart on Thursday, after the Reserve Bank of New Zealand left its official cash rate unchanged but indicated that rates will need to rise over the next two years to curb inflation.

NZD/USD clawed back up from a daily low of 0.8142 to hit 0.8204, during late Asian trade, gaining 0.68%.

The pair was likely to find support at 0.8071, the low of June 3 and resistance at 0.8262, the high of May 31 and the pair's highest since exchange rate controls ended in 1985.

"As gross domestic product growth picks up, underlying inflation is expected to rise," RBNZ Governor Alan Bollard said after leaving the benchmark interest rate at 2.5%. "A gradual increase in the official cash rate over the next two years will be required to offset this."

Governor Bollard also said he expected the New Zealand dollar would gradually decline from its current record level.

The New Zealand dollar weakened earlier after government data showed that Australian employment growth slowed sharply last month and full time employment declined.

The kiwi was also higher against its Australian counterpart, with AUD/NZD tumbling 0.89% to hit 1.2910.

Later in the day, the U.S. was to publish official data on its trade balance as well as a weekly government report on initial jobless claims.

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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.


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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