NZ Dollar Rises After RBNZ's Expected 50 Bps Rate Cut

(RTTNews) - The New Zealand dollar strengthened against other major currencies in the Asian session on Wednesday, as the Reserve Bank of New Zealand (RBNZ) announced its policy decision.

The Reserve Bank of New Zealand reduced its benchmark interest rate by 50 basis points, as inflation moved close to the midpoint of the target range and economic output remains below its potential.

The Monetary Policy Committee governed by Adrian Orr decided to reduce the Official Cash Rate to 4.25 percent from 4.75 percent.

Policymakers expect economic growth to recover next year, as lower interest rates boost investment and other spending. However, employment growth is forecast to remain weak until mid-2025.

The MPC cautioned that exact speed and timing of the recovery is subject to uncertainty. Traders remain cautious ahead of the release of a key U.S. inflation measure, the Thanksgiving holiday in the U.S. and uncertainty over Trump's tariff plans. Markets were positive after Israel approved a US-brokered ceasefire agreement with Lebanon's Hezbollah.

Traders also react to the minutes of the US Fed's latest monetary policy meeting that revealed officials believe it will be appropriate to "gradually" lower interest rates. They also await a slew of US economic data, including the Fed's preferred readings on consumer price inflation for clues on the interest rate outlook.

In economics news, data from the National Bureau of Statistics showed that China's industrial profits declined at a slower pace in October. Industrial profits posted an annual decline of 10 percent on a yearly basis in October. This follows a sharp 27.1 percent decrease in September.

The improvement in October was partly due to the low base of comparison.

In the Asian trading now, the NZ dollar rose to a 9-day high of 1.1013 against the Australian dollar, a 6-day high of 0.5882 against the U.S. dollar and a 2-day high of 1.7834 against the euro, from yesterday's closing quotes of 1.1092, 0.5834 and 1.7973, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 1.09 against the aussie, 0.60 against the greenback and 1.76 against the euro.

Against the yen, the kiwi edged up to 89.89 from an early more than a 2-month low of 89.10. The kiwi may test resistance around the 93.00 region.

Looking ahead, the market research group GfK releases Germany's consumer confidence survey data for December at 4:30 am ET. The forward-looking consumer sentiment index is expected to fall to -18.8 in December from -18.3 in November.

In the New York session, U.S. weekly mortgage approvals data, U.S. Core PCE price index for October, personal income and spending for October, durable goods orders for October, pending home sales for October, U.S. Chicago PMI for November, U.S. EIA crude oil data and U.S. Baker Hughes oil rig count data are slated for release.