Kiwi Soars as RBNZ "Unexpectedly" Holds Rates

NZD

The New Zealand Dollar edged higher against rivals following a "surprise" decision by the Reserve Bank of New Zealand. The market was widely expecting the bank to cut the Official Cash Rate by 25 basis points to 0.75%. However, the committee decided to keep rates on hold, citing that the economic developments since August do not warrant a move in rates. In his presser, governor Orr indicated that interest rates will remain low for a while, the lower NZD was helpful, and the bank will add more stimulus if needed. The NZDUSD soared to a one-week high of $0.6416, the EURNZD tumbled to a two-month low of 1.7143, and the AUDNZD declined to a three-week low of 1.0670.

USD

The dollar index, which measures the greenback against a basket of major currencies, rose to a one-month high of 98.45 ahead of Powell's testimony. Recently, the greenback found support from the trade optimism, which reduced the chances of further monetary policy easing by the Federal Reserve. Today, market participants will look forward to grasping hints on the economic outlook and the future of interest rates as Powell testifies on the economy before the joint economic committee in Washington DC. On the data front, October CPI figures will be published later on the day. Currently, the US 10-year yields sit at 1.916%, the USDJPY is edging higher to 109.15, and the EURUSD is testing $1.10 handle.

Metals

Gold prices inched higher as US yields drifted lower following Trump's speech. The latter threatened to raise tariffs substantially in case of no trade deal. The price of a gold ounce surged to $1463 after testing a three-month low of $1446, the price of a silver ounce rallied to $16.96, and palladium recovered to $1732.

Oil

Oil prices remain caught in a tight trading range awaiting fresh fundamental drivers. Both benchmarks dropped to the bottom of the consolidation zone following Trump's speech. The West Texas Intermediate crude futures declined to $56.34, and Brent futures fell to $61.39. On the data front, the American Petroleum Institute will report the weekly crude oil stock later on the day.

Major Economic Events

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