NZ Dollar Rises As RBNZ Holds Rates As Expected

(RTTNews) - The New Zealand dollar appreciated sharply against other major currencies in the Asian session on Wednesday, after the announcement of Reserve Bank of New Zealand's Official Cash Rate steady, as expected by the economists.

The Reserve Bank of New Zealand announced that it is holding its Official Cash Rate steady at 5.50 percent, in line with expectations and unchanged.

In the accompanying statement, the RBNZ said interest rates are restricting spending in the economy and consumer price inflation is declining, as is necessary to meet the Committee's Remit. However, inflation remains too high, and the Committee remains wary of ongoing inflationary pressures.

Internationally, economic growth has been stronger than was expected at the start of this year but remains below trend and is likely to slow further. This subdued growth outlook will continue to restrain New Zealand's export revenues, the bank said.

Meanwhile, the Asian stock markets traded higher, following the broadly positive cues from the Wall Street overnight. Traders are also cautiously optimistic over the outlook for interest rates following recent economic data.

Strong gains among gold miners and technology stocks also boosted the investor sentiment.

Also, the crude oil prices rose sharply on hopes that OPEC will extend output cuts at Thursday's ministerial meeting. A weak dollar contributed as well to the jump in oil prices. West Texas Intermediate Crude oil futures for January ended up $1.55 or 2.1 percent at $76.41 a barrel.

In the Asian trading now, the NZ dollar rose to nearly a 4-month high of 0.6209 against the U.S. dollar, from yesterday's closing value of 0.6136. The kiwi may test resistance near the 0.64 region.

The kiwi advanced to nearly a 2-week high of 91.22 against the yen, from a recent 6-day low of 90.23. On the upside, 92.00 is seen as the next resistance level for the kiwi.

Against the euro and the Australian dollar, the kiwi climbed to 1-1/2-month highs of 1.7742 and 1.0729 from yesterday's closing quotes of 1.7908 and 1.0833, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 1.74 against the euro and 1.06 against the aussie.

Looking ahead, Germany's import price data for October is due to be released at 2:00 am ET in the pre-European session.

In the European session, the Bank of England is set to release mortgage approvals for October and the European Commission publishes euro area economic sentiment survey results for November.

At 3:00 am ET, the European Central Bank will hold its non-monetary policy meeting in Frankfurt.

In the New York session, U.S. MBA mortgage approvals data, Canada quarterly second estimate GDP growth rate, U.S. retail and wholesale inventories for October, good trade balance data for October, U.S. EIA crude oil data and U.S. Fed's Beige book report are slated for release.

At 8:00 am ET, Destatis is scheduled to issue Germany's flash consumer and harmonized prices for November. Consumer price inflation is expected to slow to 3.5 percent from 3.8 percent in October.