Investing.com – NZD/USD rose slightly on Thursday during Asian trading hours as Reserve Bank of New Zealand left the cash rate at a record low of 2.5% and the Federal Reserve decided to cut its monthly bond-buying program by USD10 billion.
Earlier today, in a statement the RBNZ said that, "economic expansion has considerable momentum" and adding that a return of interest rates to more normal levels can be expected "soon." "While headline inflation has been moderate, inflationary pressures are expected to increase over the next two years. In this environment, there is a need to return interest rates to more-normal levels," it said.
Coming up in Asia are Japan December retail sales at 0850 local time (2350 GMT) +3.8% expected year on year, Australia''s Q4 import/export price index at 1130 local time (0030 GMT) with +1.0 and -0.5% expected respectively, and the China HSBC China Manufacture PMI for January at 0945 local time (0145 GMT) with a reading in the below expansion zone of 49.6 expected.
NZD/USD rose 0.02% at 0.8215, USD/JPY rose 0.01% at 102.27, while AUD/USD fell 0.05% at 0.8735.
On Wednesday, the U.S. dollar moved off earlier lows and traded mixed against most major currencies after the Federal Reserve said it was cutting USD10 billion from its USD75 billion monthly bond-buying program.
The Federal Reserve on Wednesday left its benchmark lending target, the fed funds rate, unchanged at 0.00%-0.25% and trimmed USD10 billion from its USD75 billion monthly asset-purchasing program in place to spur recovery.
The Fed is now purchasing USD65 billion in Treasury holdings and mortgage debt a month to help make broader financial conditions more accommodative in order to strengthen recovery.
Economic activity is picking up, the labor market is making some improvement, while recent congressional inability to agree on spending packages is still dragging on recovery albeit less nowadays due to recent compromises.
Such a scenario prompted monetary authorities to taper the Fed''s monthly bond purchases, which aim to push down long-term interest rates to boost the economy, thus weakening the dollar as long as they remain in effect.
The news, which was widely expected, brought the dollar off earlier lows on prospects that the Federal Reserve will continue to taper its stimulus program as long as the economy improves.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.01% at 80.62.
Later today, the U.S. is to publish preliminary data on fourth-quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.
Jerusalem Post Annual Conference. Buy it now, Special offer. Come meet Israel's top leaders