The New Zealand dollar has is losing to its US counterpart during Wednesday trading
The New Zealand dollar has so far lost more than 0.5% to its US counterpart during Wednesday trading. The kiwi’s drop came despite the announcement earlier in the day that the central bank will hike interest rates as expected and raise the long-term cash projection. The markets were expecting a steeper rise than the announced 25 basis points and, also, a more hawkish stance from Adrian Orr, the governor. This disappointment was promptly priced-in, triggering a decline for the Antipodean currency. Such a scenario, where the announcement of a rate hike ends up triggering losses against the US dollar, also reflects investor expectations that the Fed will be taking a more hawkish stance by increasing the pace of tapering and hiking rates sooner than previously expected. This follows the reappointment of Jerome Powell for a second mandate as Chair, which revealed the White House’s implicit support for the tightening of monetary policy.
The price of WTI increased during early Wednesday trading, as investors reacted with indifference to the announcement that a group of countries, led by the US, will release part of their strategic oil reserves into the market in an effort to cap further price rises. As well as the volume released into the market being smaller than had been expected, reports started circulating that OPEC+ may move to counteract this measure by reducing output, negating any impact on the supply and demand balance the release will have.
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