Investing.com — Asian currencies traded mixed on Wednesday, with the New Zealand dollar tumbling after the Reserve Bank unexpectedly held interest rates, while the U.S. dollar remained near a two-week high ahead of the Federal Reserve’s policy decision later in the day.
The New Zealand dollar slumped as traders had anticipated another hike, while the Australian dollar gained after quarterly inflation data and markets awaited Thailand’s interest-rate decision later in the day.
The U.S. dollar index rose 0.1% to 102.40, after gaining 0.3% on Tuesday to reach its highest level since October 14. The USD/JPY pair rose marginally to 157.98, reversing an earlier dip.
Fed expected to hold as markets seek December signals
The Federal Reserve is widely expected to leave interest rates unchanged at the conclusion of its two-day meeting later on Wednesday.
CME FedWatch data put the probability of a hold at 91%, leaving investors focused on whether policymakers signal another rate move in December.
The dollar rose 0.3% on Tuesday to 102.4, its highest level since October 14, and remained near that level in early Asian trading. Most major currencies were relatively stable ahead of the decision, with the euro and sterling posting only small declines.
The U.S. 10-year Treasury yield remained near 5%, at 4.9967%, as markets assessed the outlook for inflation and interest rates. The U.S. 10-year Treasury yield was last reported unchanged at 4.9967%, as investors looked for signals on the Fed’s next steps.
Kiwi tumbles after RBNZ, Aussie rises after inflation data
The NZD/USD pair fell 1.1% to $0.5616, after dropping as much as 1.7% following the Reserve Bank of New Zealand’s decision to keep its official cash rate at 2.75%. The pair touched an intraday low of $0.5583.
The decision surprised markets, with the hold leaving traders reassessing the New Zealand rate outlook and triggered a sharp decline in the kiwi.
The AUD/USD pair gained 0.2% to $0.7036 after Australian inflation accelerated in the September quarter. The consumer price index rose 1.3% quarter-on-quarter, up from 0.6% in the previous quarter. The annual rate remained above the Reserve Bank of Australia’s target at 3.6%.
