The New Zealand dollar nearly touched a record high versus the U.S. dollar after the weak U.S. economic growth spurred speculation that the Federal Reserve won’t hike interest rates any time soon.
The kiwi surged 0.2 percent to trade at 87.58 U.S. cents in midmorning trading in New York after earlier rising to 87.76, the most since May 6. The currency touched 88.43 U.S. cents in August 2011, the strongest level since the New Zealand authorities removed exchange-rate controls on the local currency in 1985.
“The kiwi has been a favorite for a while,” Neil Mellor, a London-based currency strategist at Bank of New York Mellon told Bloomberg. “It’s fairly clear that the RBNZ have embraced the tightening cycle. The emphasis that there has been on yield seeking has been stoked further.”
The New Zealand dollar has surged 3.1 percent versus the dollar, making it the biggest gainer out of 16 major currencies. The Norwegian krona is the biggest loser, having lost 2.8 percent while the Mexican peso declined 1.2 percent
The yen also extended its gains against the dollar after a U.S. report showed that personal expenditure grew less than forecasted, dampening expectations that the Fed may hike the short-term interest rates.
The dollar fell 0.3 percent to 101.56 yen. The dollar also plummeted 0.2 percent versus the pound to trade at $1.7007. The U.S. currency however rose 0.3 percent to $1.3588 against the euro.
The British pound surged against the euro and the dollar after the Bank of England Governor Mark Carney announced new policies targeted at curbing unsustainable consumer debt and reduce the build-up of risky mortgages. The pound advanced 0.3 percent versus the euro to trade at 79.98 pence. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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