Forexpros – The New Zealand dollar rose against its U.S. counterpart on Thursday after the Reserve Bank of New Zealand left benchmark interest rates unchanged at 2.50%.
Weak retail sales figures out of the U.S. also pushed the kiwi up.
NZD/USD hit 0.7755 in Asian trading on Thursday, up 0.43% and up from a session low of 0.7722 and off from a high of 0.7770.
The pair sought to test support at 0.7721, the low of June 13, and resistance at 0.7810, the high of June 12.
Europe, a key trading partner, continues to threaten New Zealand’s exports, namely commodities that have been falling in value, though monetary policy authorities deemed it appropriate to keep the Official Cash Rate (OCR) unchanged at 2.5%.
“Offsetting these negative influences, housing market activity continues to increase, supported by recent reductions in mortgage interest rates. In addition, repairs and reconstruction in Canterbury are expected to substantially boost construction sector activity in coming quarters,” the Reserve Bank of New Zealand says in a statement.
“It remains appropriate for monetary policy to remain stimulatory, with the OCR being held at 2.5 percent.”
Meanwhile, news out of the U.S. was bearish for the greenback.
Earlier in the U.S., the Commerce Department reported that retail sales fell by a seasonally adjusted 0.2% in May, while April’s figure was revised to a 0.2% decline from a previously reported gain of 0.1%.
The data represented the first back-to-back decline in two years.
Meanwhile, core retail sales, which are stripped of automobile sales, fell by 0.4% in May, the biggest decline in a year.
Producer price inflation fell 0.1% in May, while core producer price inflation fell 0.2% in May, the latter being the largest monthly decline since July 2009.
The figures fueled already growing sentiment that the Federal Reserve will roll out a third round of quantitative easing to spur growth later this year, possibly at its next monetary policy meeting June 19-20.
Quantitative easing involves the Fed purchasing assets held by banks, injecting liquidity into the economy to spur investment and hiring and weakening the greenback in the process.
The New Zealand dollar, meanwhile, was up against the yen and up against its Australian counterpart, with NZD/JPY gaining 0.23% to 61.61 and AUD/NZD down 0.22% at 1.2814.
Later Thursday, the U.S. will unveil inflation data, the latest current account balance and weekly initial jobless claims, while manufacturing data is due out of New Zealand.