NZ Dollar Rises On RBNZ Surprise Rate Hike

(RTTNews) - The New Zealand dollar strengthened against other major currencies in the Asian session on Wednesday, after the Reserve Bank of New Zealand raised their cash rate target by 50 basis points, more than the consensus expected.

The Monetary Policy Committee of RBNZ increased its Official Cash Rate (OCR) by 50 basis points to 5.25 percent from 4.75 percent. Economists had expected a moderate 25 basis point hike.

RBNZ Governor Adrian Orr said in the statement, "We are raising interest rates because inflation is too high. Raising interest rates is the main tool we use to get inflation down."

The NZ dollar showed mixed trading against other major rivals on Tuesday. While the kiwi rose against the U.S. dollar and the yen, it fell against the euro. Against the Australian dollar, the kiwi held steady.

In the Asian session today, the NZ dollar rose to a 3-week high of 83.97 against the yen and more than a 2-week high of 1.7167 against the euro, from yesterday's closing quotes of 83.14 and 1.7343, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 86.00 against the yen and 1.67 against the euro.

Against the U.S. and the Australian dollars, the kiwi advanced to nearly a 2-month high of 0.6379 and a 3-1/2-month high of 1.0618 from yesterday's closing quotes of 0.6311 and 1.0696, respectively. On the upside, the kiwi may find resistance around 0.64 against the greenback and 1.06 against the aussie.

Looking ahead, Germany factory orders for February and March PMI reports from Eurozone countries and U.K. are due in the European session.

U.S. and Canada trade data for February, U.S. PMI reports for March and U.S. EIA crude oil data are slated for release in the New York session.