Forex - NZD/USD gains as New Zealand holds rates steady
Published Oct 24, 2012 09:33PM ET
Investing.com - The New Zealand dollar rose against its U.S. counterpart on Thursday after New Zealand held benchmark interest rates unchanged at 2.5%.
The Federal Reserve, meanwhile, also announced it was leaving U.S. rates unchanged at near zero, which sent the kiwi gaining against the greenback.
NZD/USD hit 0.8233 in Asian trading on Thursday, up 0.35%, up from a session low of 0.8206 and off from a high of 0.8235.
The pair sought to test support at 0.8149, the Friday's low, and resistance at 0.8238, the high of Oct. 9.
In New Zealand, the economy remains on rocky footing though better days may lie ahead thanks to a firming housing sector.
"The global economy remains fragile, with further recovery heavily dependent on policy implementation. That said, market sentiment has improved from earlier in the year, suggesting the risks to the global outlook are more balanced," Reserve Bank Governor Graeme Wheeler said in a statement.
“Domestically, GDP continues to expand at a modest pace. Housing market activity is increasing as expected, and repairs and reconstruction in Canterbury are boosting the construction sector."
Many had predicted loosening, and an announcement of no policy change bolstered the New Zealand dollar.
In the U.S., the Federal Reserve said conditions meriting loose policies will stick around likely through 2015.
"The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the Federal Open Market Committee, the Fed's rate-setting body, said in a statement.
"If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability."
Both policy announcements created conditions ripe for the pair to rise.
The New Zealand dollar, meanwhile, was up against the yen and up against its Australian counterpart, with NZD/JPY gaining 0.54% to 65.83 and AUD/NZD down 0.22% at 1.2591.
Later Thursday, the U.S. is to release official data on durable goods orders, a leading indicator of production, as well as data on pending home sales and initial jobless claims.
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Written By: Investing.com
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