Published: Sun, June 18, 2017
Money | By Oscar Reynolds

NZ dollar falls vs pound on split BOE over rate hike

NZ dollar falls vs pound on split BOE over rate hike

Wednesday saw EUR/USD jump to a high of 1.1288, which was the pair's best level since August 2016.

The dollar resumed its drop against its Canadian counterpart after skidding to its lowest levels since late February in the wake of hawkish comments from Bank of Canada Governor Stephen Poloz, who signalled that the BOC could raise interest rates sooner than previously thought.

At the time of writing this article, the Euro Australian Dollar exchange rate trended in the region of 1.4710.

The dollar index, which tracks the USA currency against six major peers, rose to 97.557, its highest since May 30. The dollar index was little changed on Thursday after having slid to as low as 96.323 on Wednesday, having shed almost 6 percent on the year, before bouncing back a tad on the Fed's policy tightening.

The Eurozone's April trade balance report also disappointed.

The US dollar rose to its highest in more than two weeks on Thursday as solid readings on the US economy helped strengthen the case for the Federal Reserve to continue tightening monetary policy this year. When Wednesday's US inflation data from May was published, the US Dollar briefly plunged.

On Wednesday June 14, while trying to make it look like it clearly was telegraphing its intentions to cut its $4.2 trillion in holdings of Treasury bonds and mortgage-backed securities, the Fed left some bits of the process intentionally ambiguous.

Against its Japanese counterpart, the dollar shrugged off earlier losses and was flat at 109.54 yen, above Wednesday's eight-week low of 108.81 yen. But the Fed maintained its forecast for three rate hikes next year. The Fed also indicated that its interest rate outlook had not worsened despite this week's inflation data. Month-on-month inflation was projected to remain at 0.1% but instead dropped to 0%.

Analysts and investors are still unsure if the Fed will manage a third 2017 United States interest rate hike. This is because analysts and investors are still uncertain about the likelihood of a third 2017 rate hike, with bets still below 50%.

The Australian Bureau of Statistics earlier reported that the number of employed people rose by 42,000 in May, beating expectations for a 10,000 gain. USA industrial production failed to meet expectations in May but June's empire state manufacturing index jumped far higher to 19.8 after a disappointing -1 result in May.

Thursday will see the publication of May's inflation stats from France and Italy, with final May inflation results for the overall Eurozone being published on Friday.

At 1.55pm, the rupee was trading at 64.27 a dollar, up 0.11% from its Tuesday's close of 64.34.

As for U.S. data Friday's MI consumer sentiment survey from June, as well as May building permit and housing start reports could influence the "Greenback".

The US Dollar's Fed-related gains were relatively limited however.

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