Dollar steady ahead of Fed decision, kiwi swoons after RBNZ holds
TLT•The US dollar held near a two-week high ahead of the Federal Reserve decision, while the New Zealand dollar fell as much as 1.7% after the Reserve Bank of New Zealand unexpectedly held rates at 2.75%. The Australian dollar edged up 0.1% after quarterly inflation rose to 1.3%.
1. Kiwi falls after rate hold
The New Zealand dollar sank as much as 1.7% to $0.55831 after the Reserve Bank of New Zealand unexpectedly held its interest rate at 2.75%. A poll of economists had found 22 of 27 expected a rate increase. The currency pared some losses after Governor Anna Breman said the committee expected further official cash rate increases in coming meetings, which could be higher than indicated at its September meeting.
2. Dollar awaits Fed decision
The US dollar index was flat at 102.40, near its highest level since October 14, as traders broadly expected the Federal Reserve to leave policy unchanged. Fed funds futures implied a 91% chance of no change. The US 10-year Treasury yield rose 2.2 basis points to 5.0112%.
3. Other currencies move
The Australian dollar rose 0.1% to $0.70345 after inflation reached 1.3% in the third quarter, up from 0.6% in the previous quarter. The Canadian dollar was slightly weaker ahead of the Bank of Canada decision, with money markets implying a 77% chance of a 25-basis-point rate increase. The Israeli shekel fell 1% as election exit polls pointed to political deadlock.
