NZD/USD: Kiwi stumbles for 10-Month High as Oil Falls


NZD/USD kiwi stumbles

The NZD fell from a June-2015 high on Wednesday after oil prices slipped, following reports that Kuwait workers would end their three-day strike later today.

Wellington – Currencies linked to commodities traded lower on Wednesday morning in Asia after oil prices had a soft start to the day, with renewed expectations of increased production driving oil back down.

West Texas Intermediate futures fell 2.52% to $41.40 per barrel on Wednesday after Kuwait’s Oil Employees’ Union said it would end a workers’ strike which began on Sunday. Brent crude future contracts also tracked lower on the news, slipping 2.48% to $42.95 per barrel.

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Sharp increases in commodity prices on Tuesday helped push the kiwi to a ten-month high of $0.7054, but today’s decline in oil dragged the NZD/USD 0.47% lower to $0.7006.

The New Zealand dollar has had a solid run over the last few months despite the nation’s central bank cutting interest rates to record-low levels last month.

Economists are split over whether or not the Reserve Bank of New Zealand (RBNZ) will cut the Official Cash Rate (OCR) at next week’s meeting after recent data has come in better than expected.

Inflation figures released on Monday revealed that the CPI rose 0.2% in the March quarter, pushing the annual change in the CPI up from 0.1% to 0.4%.

The inflation outcome was on par with the RBNZ’s March forecasts but slightly above the market’s expectations and still well below the RBNZ’s 2% target midpoint.

Market pricing for a 25 basis point cut at next week’s meeting fell from around 50% last week to 20% on Tuesday, with last night’s increase in the Global Dairy Trade (GDT) index also helping to reduce expectations of a near-term rate cut.

The GDT index rose 3.8% on Tuesday, the strongest increase in the index since October.

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