WELLINGTON: The New Zealand dollar jumped to a one-week high on Thursday after the Reserve Bank of New Zealand (RBNZ) delivered a smaller interest rate cut than some had wagered on, while the Australian dollar was pressured by weakness in commodity prices.
The kiwi climbed more than half a U.S. cent to a peak of $0.6654, after the central bank cut its cash rate by 25 basis points to 3.0 percent in response to a dimmer economic outlook and lower inflation.
The kiwi rallied against the Aussie, which fell to NZ$1.1130 , and gained nearly 1 percent on the yen.
“The RBNZ delivered a 25 basis point rate cut, although disappointed those positioned for a ‘surprise’ more aggressive 50 basis point cut,” said Annette Beacher, chief Asia-Pac macro strategist at TD Securities in Singapore.
It was last at $0.6617, up 0.7 percent on the day and moving away from a six-year low of $0.6498 touched last week.
Resistance was seen above $0.6650, while offers were suspected around $0.6700.
Some analysts, however, predict the bounce is temporary with more rate cuts seen on the horizon.
“The currency will definitely go lower over time but it’s just that the market’s got some extremely massive speculative positions in it and the risk is that they get cleared out somewhat before we go lower again,” said Tim Kelleher, head of institutional FX sales at ASB bank in Auckland.
