Thursday July 24, 2014 - 00:32:26 GMT
Share This Story
Reuters - www.reuters.com
FOREX-Kiwi hits skids, others buy time before China PMI
* NZ dollar falls sharply after RBNZ sounds less hawkish
* RBNZ lift rates again but presses pause button
* G3 currencies sidelined in absence of fresh drivers
* Next focus on China PMI, due 0145 GMT
By Ian Chua
SYDNEY, July 24 (Reuters) - The New Zealand dollar skidded to a six-week low on Thursday after the country's central bank switched to a wait-and-see stance following its fourth straight rate hike, while other major currencies snoozed.
The kiwi dollar dropped nearly a full U.S. cent to as low as $0.8606, touching levels not seen since June 12. In contrast, the euro was stuck at eight-month lows around $1.3461, leaving the dollar index hovering at a six-week peak set on Tuesday.
Against the yen, the U.S. dollar firmed a tad to 101.54 , continuing to recover slowly from last Friday's low of 101.09. The euro was little changed at 136.67, having reached a near six-month trough at 136.41 on Wednesday.
An absence of any meaningful U.S. or European data was seen as partly to blame for the uninspiring performance in the major currencies. But persistent expectations for further stimulus in the euro zone appeared to be taking a toll on the common currency.
Worries about tougher sanctions on Russia and the potential impact that might have on the euro zone's already shaky outlook did not help the euro.
Risk appetite in the wider markets was also somewhat curbed by conflicts in Ukraine and the Gaza Strip, although bullish results from Apple Inc helped lift the benchmark S&P 500 index to a record closing high.
The Reserve Bank of New Zealand (RBNZ) raised its cash rate by 25 basis points to 3.5 percent early on Thursday and pushed the pause button, saying the economy appeared to be responding to higher rates as intended.
The move was not a complete surprise given many have been questioning the need for more tightening in the face of a high currency, restrained inflation and falling diary prices, the country's biggest export earner.
Yet the reaction in the kiwi was swift and savage with investors knocking the currency from around $0.8703 to $0.8606. It last traded at $0.8613.
"Perhaps the main surprise was the language regarding the high NZD exchange rate. 'There is potential for a significant fall' opens to interpretation as a veiled intervention threat," said Imre Speizer, senior strategist at Westpac in Auckland.
Analysts at Citi said it is unusual for a central banker to make such blunt comments about the currency and showed a high level of frustration with the strong kiwi.
The Australian dollar ceded a bit of ground versus the greenback in sympathy with its kiwi peer, dipping to $0.9443 from a three-week high of $0.9463.
The near-term outlook for the Antipodean currencies now rests on the outcome of a survey on China's vast manufacturing sector due at 0130 GMT. Any disappointment will no doubt given kiwi bears a fresh excuse to attack the currency. (Editing by G Crosse)
© Thomson Reuters 2014. All rights reserved
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."