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Reliance Trading Co. Limited – Global Forex Update - Dollar Edges Higher
The dollar edged higher on Wednesday and antipodean currencies beat a hasty retreat after the Reserve Bank of New Zealand surprised the markets by opening the door to future monetary policy easing.
By: Reliance Trading Co. Limited
The New Zealand dollar tumbled after the central bank kept interest rates at a record low of 1.75 percent and said increased downside risks to its outlook meant the next move in rates was now more likely to be a cut.
The kiwi was last down 1.5 percent at $0.6803 after hitting a 2-1/2-week trough of $0.6797.
The Australian dollar retreated in sympathy with its New Zealand peer, shedding 0.4 percent to $0.7106.
The U.S. Federal Reserve last week brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year amid signs of an economic slowdown.
The European Central Bank, Reserve Bank of Australia and the Bank of Japan have also taken a dovish tilt this year, while China's central bank began loosening policy in 2018.
The greenback was already on a firm footing after advancing on Tuesday, when 10-year Treasury debt yields rebounded due to stock gains on Wall Street.
An inversion of the U.S. yield curve, which has preceded every U.S. recession over the past 50 years, chilled risk sentiment and triggered a sharp stock selloff last week.
Yields for safe-haven bonds also declined, pressuring the dollar.
The euro lost 0.1 percent to $1.1255, extending overnight losses. The currency has been on shaky ground after Friday's weaker-than-
The pound edged down 0.15 percent to $1.3185, retracing its earlier gains in the face of the broadly stronger dollar.
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