New Zealand dollar nosedives after RBNZ stuns market
TLT•The New Zealand dollar fell after the Reserve Bank of New Zealand held its official cash rate at 2.75%, despite markets pricing in a hike. The Australian dollar rose 2% against the kiwi as Australian core inflation reached 3.7% year over year and markets priced an 88% chance of an RBA hike next week.
1. RBNZ holds rates
The Reserve Bank of New Zealand held its official cash rate at 2.75% on Wednesday, after markets had priced in a quarter-point hike. The committee voted 4-3 to hold, and the kiwi fell 1.2% against the U.S. dollar to $0.5607. Short-term swap rates slid 10 basis points.
2. Australia rate expectations
The Australian dollar rose 2% against the kiwi at one point, reaching NZ$1.2602, its highest level since early 2013. Australian core inflation climbed 1% in the third quarter, taking the annual rate to 3.7%. Markets priced an 88% chance of a quarter-point RBA hike at its November 3 meeting, up from 60% before the data.
