The New Zealand
dollar slumped to four-year lows on Thursday as investors priced in a
greater chance of rate cuts there, while U.S. dollar bulls focused on
the positive in the Federal Reserve's latest policy statement.
The kiwi skidded to $0.7320 NZD=D4
after the Reserve Bank of New Zealand opened the door to a possible cut
in rates, having only last month flagged that further tightening was
needed.
Traders said the move to a neutral stance was expected, but giving an allowance for rate cuts was not.
"For
the NZ dollar, a further repricing of RBNZ rate expectations will imply
a period of under performance against the G10 crosses, especially given
that a number of markets have already undergone a significant repricing
of policy expectations in recent months," JPMorgan analyst Sally Auld
said.
The kiwi last stood
at $0.7323, hovering at lows not seen since March 2011. Against the yen,
it slid to its lowest levels in three months at 85.88 NZDJPY=R.
While the RBNZ was unambiguously dovish, the Fed had something for everyone. The hawks latched onto its upbeat outlook for the economy, while the doves interpreted a reference to global markets as suggesting it might delay any interest rate hike.
The Fed said it would take "financial and international developments" into account when determining when to raise rates, referring to global markets for the first time since January 2013.
But the dollar held its ground against most of its peers. The euro, already under renewed pressure on worries about Greece, dipped to $1.1275 EUR= and toward an 11-year trough of $1.1098 set first thing this week.
Greece's newly installed leftist prime minister, Alexis Tsipras, challenged international creditors on Wednesday by halting privatization plans agreed under the country's bailout deal, prompting a third day of heavy losses on financial markets.
The dollar also climbed against sterling GBP=D4 and reached a 5-1/2-year high on the Canadian dollar CAD=D4. On the yen, the greenback eased to 117.45 JPY=, near the bottom-end of the prevailing 117.00-119.00 range.
All that left the dollar index .DXY slightly firmer at 94.665 and not far from an 11-year peak of 95.481 set on Friday.
Traders said the move to a neutral stance was expected, but giving an allowance for rate cuts was not.
The kiwi last stood
at $0.7323, hovering at lows not seen since March 2011. Against the yen,
it slid to its lowest levels in three months at 85.88 NZDJPY=R.While the RBNZ was unambiguously dovish, the Fed had something for everyone. The hawks latched onto its upbeat outlook for the economy, while the doves interpreted a reference to global markets as suggesting it might delay any interest rate hike.
The Fed said it would take "financial and international developments" into account when determining when to raise rates, referring to global markets for the first time since January 2013.
But the dollar held its ground against most of its peers. The euro, already under renewed pressure on worries about Greece, dipped to $1.1275 EUR= and toward an 11-year trough of $1.1098 set first thing this week.
Greece's newly installed leftist prime minister, Alexis Tsipras, challenged international creditors on Wednesday by halting privatization plans agreed under the country's bailout deal, prompting a third day of heavy losses on financial markets.
The dollar also climbed against sterling GBP=D4 and reached a 5-1/2-year high on the Canadian dollar CAD=D4. On the yen, the greenback eased to 117.45 JPY=, near the bottom-end of the prevailing 117.00-119.00 range.
All that left the dollar index .DXY slightly firmer at 94.665 and not far from an 11-year peak of 95.481 set on Friday.
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