TOKYO The New Zealand dollar took center stage in early Asian trade on Thursday, surging to a one-year high after the Reserve Bank of New Zealand defied expectations for an interest rate cut and stood pat.
The currency was up 1.5 percent at $0.7126 NZD=D4 after climbing as far as $0.7139, from around $0.7020 before the policy decision, reaching a high not seen since June 2015 after the RBNZ held rates steady but retained an easing bias.
Reserve Bank of New Zealand governor Graeme Wheeler said at a media conference the bank would not hesitate to adjust interest rates if needed.
"If U.S. data continues to disappoint, the kiwi could continue to push higher in the near-term," wrote Angus Nicholson, market analyst at IG in Melbourne.
"However, risks to the downside are clearly the potential for another RBNZ rate cut in August or a run of better than expected U.S. data," he said.
The dollar index inched 0.1 percent lower to 93.511 .DXY, not far from a five-week low of 94.425 plumbed on Wednesday amid fading expectations the U.S. Federal Reserve would raise interest rates as early as its meeting next week.
U.S. interest rate futures implied traders saw nearly no chance the Fed would increase rates at its two-day policy meeting ending next Wednesday FFM6, according to CME Group's FedWatch, after last week's downbeat employment data pushed back expectations of an imminent rate hike .
The dollar was 0.2 percent lower at 106.79 yen JPY=, moving back toward Monday's one-month low of 106.35.
Data showed that Japan's core machinery orders tumbled 11 percent in April from the previous month, more than the median estimate of a 3.8 percent drop, in a worrying sign for business investment.
The euro was slightly higher at $1.1398 EUR=, edging back toward the previous session's four-week high of $1.14115 even as German Bund yields notched record lows while the European Central Bank began buying corporate debt for its stimulus program.
Uncertainty over the outcome of Britain's June 23 referendum over whether to remain in the European Union has increased demand for safe-haven Bunds, pressuring their yields.
(Reporting by Lisa Twaronite; Editing by Eric Meijer)
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Updated Date: Jun 09, 2016 06:45 AM