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Kiwi Gains In Asia As RBNZ Holds Stead, Warns Policies May Impact Prices

11/9/2017, 9:58:17 AMMarket Analysis
Kiwi Gains In Asia As RBNZ Holds Stead, Warns Policies May Impact Prices

The kiwi gained on Thursday as the central bank held rates steady as expected and warned that new fiscal and social policies by a Labour-led government could impact its price forecasts.

On Thursday Japan reports core machinery orders, expected down 1.8% for September on month. And China reports prices data with CPI seen up 0.2% on month, up 1.8% on yearand PPI up 6.7%, all for October.

NZD/USD traded at 0.6966, up 0.97%. USD/JPY changed hands at 113.89, down 0.10% and AUD/USD traded at 0.7678, up 0.48%.

Earlier, the Reserve Bankof New Zealand held its becnchmark official cash rate steady at 1.75% as expected on Thursday, warning that the inflation outlook was uncertain as a new government pursues new policies.

"The Bank has incorporated preliminary estimates of the impact of new government policies in four areas," RBNZ Governor Grant Spencer said in a statement.

These included new government spending, a homebuilding program, curbs on immigration and increases in the minimum wage.

"The impact of these policies remains very uncertain," the RBNZ said. However, its assumption was that the policies combined would result in more fiscal stimulus than previously

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.06% to 94.75.

Overnight, the dollar traded roughly unchanged on Wednesday as traders fretted over a possibility delay to President Donald Trump’s tax reform plan while a surge in the Canadian dollar weighed on the greenback.

It was a quiet day on the economic calendar for top-tier data, investors milled over media reports suggesting that the Senate GOP are considering a one-year-delay in the implementation of corporate tax cuts.

Also weighing on the dollar was a sharp move higher in the Canadian dollar after housing data topped expectations.

Statistics Canada reported on Wednesday that building permits increased 3.8% in September, confounding expectations for a 0.2% fall while a separate report showed housing starts increased by 222.800 units last month, beating expectations for a 210,000 rise.

The move lower comes as the investor attention shifted to President Donald Trump’s arrival in China, where the president is expected to have lengthy discussions on North Korea with Chinese president Xi Jinping.