August 24, 2021

What Caused the NZD to Rocket Higher Today?

 The New Zealand dollar surged higher in the European session after witnessing the latest statement from Reserve Bank of New Zealand (RBNZ) assistant governor Christian Hawkesby.

Hawkesby told that the RBNZ’s policy decision last week was not because of the risks posed by Covid-19, but because of communication problems.

He also said that at a recent policy meeting, the RBNZ had considered raising rates by 50 basis points.

This has pushed the kiwi dollar higher in the European session, with the price moving back to the 0.7000 level against the US dollar.

This further strengthens investors' confidence that New Zealand's central bank will continue to raise interest rates this year if the Covid-19 case can be curbed immediately.

According to Reuters, the probability for the central bank to raise interest rates in October has risen back above 40%.

Meanwhile, investors have also been shown to read New Zealand retail sales data for the second quarter which rose above market expectations by rising by 3.3% from 2.4% expected, and up from 2.8% previously recorded.

Meanwhile, the rise of the kiwi dollar was also supported by the depreciation of the greenback dollar which was weakened by uncertainty about when the Federal Reserve (Fed) will make a reduction.

The nationwide closure measure was extended until Friday after the number of infections from the new cluster reached 100 cases. New Zealand also recorded the highest daily increase in Covid-19 cases since April 2020 today.