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    Kiwi soars on RBNZ surprise decision

    The New Zealand dollar surged to a one-year high on Thursday, after the Reserve Bank of New Zealand announced its decision to leave interest rates unchanged, confounding investors who had been expecting a rate cut.

    The NZD/USD jumped 1.7% to 0.7140, reaching the session high of 0.7148, a level not seen since June 2015, after the RBNZ held interest rates unchanged but retained an easing approach.

    Graeme Wheeler, the Governor of the Reserve Bank of New Zealand, stated at a press conference that the central bank could adjust interest rates if needed. He also added that inflation expectations have stabilized and that some inflation expectations were beginning to appear.

    The governor’s post-meeting comments also boosted the New Zealand dollar, as there were no hints that the RBNZ would trim rates very soon.

    The U.S. dollar index rose 0.1% to 93.515, still close to the one-month trough of 93.425 reached on Wednesday, amid declining expectations that the Fed would hike rates at its two-day policy meeting next week.
    The greenback inched down 0.3% to 106.63 against the yen, pulling back from Monday’s one-month low of 106.35.

    A report released earlier in the day showed that Japan’s core machinery orders dropped 11% in April, far exceeding economists’ expectations of a 3.8% fall, in an alarming signal for business investment.

    The single currency edged higher 0.1% to 1.1405 and posted a new four-week high of 1.1416, despite the fact that German bond yields reached record lows on Wednesday as the ECB began buying corporate debt under its monetary stimulus programme.

    Increased uncertainty over the result of Britain’s upcoming referendum on whether to remain in the E.U. has boosted demand for the safe-haven bonds, putting pressure on their yields.

    The sterling, which has experienced extremes in recent sessions on contradictory surveys on the possible vote outcome, fell 0.1% to 1.4494.

    Ahead in the session, investors will look at the U.K. trade balance, expected to be flat at -11.20 billion and the ECB President Mario Draghi’s speech.
     

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