On Wednesday, the U.S. dollar fell to a two-month low versus its major peers ahead of a crucial U.S. inflation reading. On the other hand, Pound sterling rose to a 15-month high on predictions that the Bank of England will raise interest rates further. As predicted, The Reserve Bank of New Zealand held interest rates …
On Wednesday, the U.S. dollar fell to a two-month low versus its major peers ahead of a crucial U.S. inflation reading. On the other hand, Pound sterling rose to a 15-month high on predictions that the Bank of England will raise interest rates further. As predicted, The Reserve Bank of New Zealand held interest rates steady today and mentioned that the cash rate would need to be “remained at a restrictive level for the foreseeable future”. This has caused the New Zealand dollar to be volatile. The kiwi was last up 0.56% at $0.6233. The Australian dollar was also higher, up 0.78% to $0.6739.
Senior market analyst at City Index, Matt Simpson mentioned that the RBNZ statement and minutes retained their dovish undertone overall, but they cannot not warn that inflation is still ‘too high’ as they need to contain inflation expectations. However, he added on that with the economy now in recession, it is relatively a safe bet that they have reached the terminal rate. That implies that the next topic for investors to worry about is when the RBNZ will start decreasing interest rates.
The broader market attention remained on U.S. inflation data due later today, with core consumer prices expected to have increased 5% year on year in June. The numbers should shed more light on the Federal Reserve’s progress in combating inflation. The U.S. dollar sank to a two-month old of 1001.37 against a basket of currencies ahead of the publication, extending losses from the beginning of the week as Fed officials signaled the central bank was nearing the end of its current monetary policing tightening cycle.
Boosted by predictions that Bank of England will have to tighten monetary policy further to contain British inflation, Sterling hit a 15-month high og $1.2970 in Asia trade. On Tuesday, data released indicated that a key indicator of British wages climbed at the fastest pace on record, with basic earnings up 7.3% in three months to May, exceeding predictions of a 7.1% increase.
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