New Zealand Dollar Soars Post RBNZ Meeting


The New Zealand dollar gained ground against rivals following the Reserve Bank of New Zealand monetary policy meeting. The bank left policy unchanged with interest rates staying at a historically low level of 0.25%, asset purchases program of NZ100 billion, and started funding for the lending program in December. The committee expressed willingness to increase stimulus if needed to support the economic activity. A presser for the bank governor Orr followed the decision, where his upbeat tone boosted the kiwi. He declared that the domestic economic activity has been more resilient than earlier assumed. and reiterated keeping the official cash rate at its current level until March at least. The money market is no longer pricing in a negative rate by next year. The NZDUSD rallied to $0.6904, its highest level since March 2019, the EURNZD declined to 1.1713, the lowest since February 2020.


The dollar index which measures the greenback against a basket of major currencies held steady near 92.80 as investors awaited fresh fundamental drivers. The markets continued to consume the news of reaching a vaccine that is 90% effective against Covid19. The US 10-year yields rallied to 0.982%, the highest since mid-March, where the Federal Reserve announced extra stimulus. The dollar performance was mixed across the board, as investors are weighing the impact of the current covid19 wave on rival economies and possible interventions from central banks.


Major US stock index futures were mixed as the flow between different sectors continued. Following the vaccine headline, the sectors that gained the most from Covid19 spread came under pressure, while those affected the most inched higher. This action triggered a mixed performance between stock benchmarks. The Dow Jones and S&P500 rallied to record highs, whereas the tech-heavy Nasdaq declined. In the recent session, the Dow Jones Industrial Average futures rose to 29543, the S&P500 futures advanced to 3563, while Nasdaq futures held steady near 11600, the lowest trading range since election day.


Precious metals prices continued to trade in a tight range awaiting fresh drivers. The price of a gold ounce hovered around $1875, the price of a silver ounce held steady near $24.30, and palladium futures eased to $2465.


Oil prices added to prior gains on speculation that the vaccine will restore the global economic activity to pre-pandemic levels. Investors are expecting oil-demand levels to recover gradually as people start feeling safe to resume their normal-life activity. The West Texas Intermediate crude December delivery rose to $42.54, and Brent blend January delivery inched higher to $44.79.

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