NZ Dollar Falls After RBNZ Rate Decision

(RTTNews) - The New Zealand dollar weakened against other major currencies in the Asian session on Wednesday, after the Reserve Bank of New Zealand delivered back-to-back rate hikes to contain inflation and also signaled additional tightening ahead.

The Monetary Policy Committee, governed by Anna Breman, decided to raise the Official Cash Rate by 25 basis points to 2.75 percent.

The bank had lifted the rate by a quarter-point in July, which was the first hike since May 2023.

"The Committee judges that gradually removing monetary stimulus is appropriate to return inflation to the 2 percent target mid-point while supporting growth and employment," the bank said in a statement.

The committee expects inflation to remain elevated this year before returning to the target band of 1 to 3 percent by mid-2027 and hit the 2 percent mid-point later next year.

Trader's focus will shift to US employment statistics due to be released on Friday, which may provide clues on the Federal Reserve's (Fed) policy stance. While the unemployment rate is predicted to remain stable at 4.1% for the same time, economists anticipate a recovery of 58,000 jobs in August. Any indications that the US labor market is improving could support the notion that the Fed will raise interest rates in September.

Asian stock markets traded lower as surging bond yields and higher crude oil prices amid renewed hostilities in the Middle East stoked global inflation risks and rate-hike fears.

The U.S. launched another fresh wave of attacks on Iran, striking Islamic Revolutionary Guard Corps targets, following the recent attempted attacks by the IRGC against commercial shipping in the Strait of Hormuz and against American service members deployed to the region.

US President Donald Trump announced through Truth Social that the U.S. commenced large and powerful strikes on Iran in retaliation for its recent strikes against U.S. bases in Jordan.

The attacks hit targets along the southern coast of Iran in the cities of Bandar Abbas, Jask, Chabahar, Konarak, Minab, Sirik, and the island of Qeshm. Iran's military said the U.S. will regret its actions.

While Trump claimed that the Strait of Hormuz is fully under U.S. control, in a video message, Iran's Parliament Speaker Mohammad Bagher Ghalibaf warned that the strait is in the full control of Iranian forces.

In the Asian trading today, the NZ dollar fell to nearly a 2-month low of 1.9865 against the euro and a 2-week low of 93.30 against the yen, from yesterday's closing quotes of 1.9635 and 94.58, respectively. If the kiwi extends its downtrend, it is likely to find support around 2.01 against the euro and 92.00 against the yen.

Against the U.S. and the Australian dollars, the kiwi slid to nearly a 3-week low of 0.5826 and more than a 2-month high of 1.2241 from Tuesday's closing quotes of 0.5900 and 1.2121, respectively. The kiwi may test support near 0.57 against the greenback and 1.23 against the aussie.

Looking ahead, U.S. MBA mortgage approvals data, U.S. ADP employment data, U.S. factory, U.S. EIA crude oil data and U.S. Fed Beige book report are slated for release in the New York session.