1 month ago
Forex

Kiwi Jumps on Less-dovish RBNZ; Dollar Slips on Improved Risk Sentiment

Investing.com - The NZD/USD pair advanced on Wednesday in Asia after the Reserve Bank of New Zealand (RBNZ) decision earlier

Investing.com - The NZD/USD pair advanced on Wednesday in Asia after the Reserve Bank of New Zealand (RBNZ) decision earlier in the day.

The central bank kept the interest rates unchanged at 1.75% but refrained from offering any fresh dovish signals either for future monetary policy change or headline economic indicators.

RBNZ Governor Adrian Orr also backed the central bank’s outlook and said the chances of a rate cut had not increased and risks are finely balanced.

The NZD/USD pair last traded at 0.6845 by 11:29 PM ET (04:29 GMT), up 1.7%, as markets were likely positioned for a much more dovish RBNZ.

Meanwhile, the U.S. Dollar Index slipped 0.1% to 96.453. More positive news on the trade front coming out from the U.S. side improved risk sentiment and reduced demand for safe-haven assets, including the U.S. dollar.

U.S. President Donald Trump said on Tuesday that he is willing to extend the March 1 deadline if China and the U.S. get closer to a deal soon. U.S. Treasury Secretary Mnuchin told reports earlier in the day that he hopes for “productive” trade meetings in China. Mnuchin and Trade Representative Robert Lighthizer are scheduled to meet with Chinese Vice Premier Liu He later this week.

Their comments revived risk appetite in broader markets, with Asian equities gaining for a second day.

The fall in the dollar also came as Federal Reserve Chairman Jerome Powell played down the possibility of a recession in the United States, reiterating the U.S. economy is on solid footing.

"Today, data at the national level show a strong economy. Unemployment is near a half-century low, and economic output is growing at a solid pace," Powell said in remarks to the Hope Enterprise Corporation Rural Policy Forum, in Mississippi.

The Chinese yuan also advanced against the U.S. dollar following the news, as the USD/CNY pair fell 0.3% to 6.7536.

The People's Bank of China (PBOC) set the yuan reference rate at 6.7675 vs the previous day's fix of 6.7765.

Elsewhere, the USD/JPY pair edged up 0.1% to 110.57.

The AUD/USD pair was up 0.5% to 0.7130.