NZD/USD on five-week highs after RBNZ rate decision

New Zealand dollar received a boost against its US counterpart on Thursday, reaching five-week highs, after Reserve Bank of New Zealand introduced no change in the base interest rate. However, good recent US housing data still supported the greenback.

NZD/USD hit a session high at 0.8009 at 7:22 GMT, after which consolidation followed at 0.8002. Support was likely to be found at July 19th low, 0.7887, while resistance was to be met at June 17th high, 0.8100.

Earlier on Thursday the central bank of New Zealand left its base interest rate unchanged at 2.50%. New Zealand dollar was bolstered, as traders increased bets that Governor Graeme Wheeler will raise the Official Cash Rate in January 2014.

“Although removal of monetary stimulus will likely be needed in the future, we expect to keep the OCR unchanged through the end of the year,” Wheeler said in a statement in Wellington today, cited by Bloomberg. “The extent of the monetary policy response will depend largely on the degree to which the growing momentum in the housing market and construction sector spills over into inflation pressures. Growth in the New Zealand economy is picking up and although uneven is becoming more widespread across sectors. Consumption is increasing and reconstruction in Canterbury will be reinforced by a broader national recovery in construction activity, particularly in Auckland”, he also added.

Meanwhile, the US dollar remained supported after the upbeat new home sales data, released on Wednesday, which gave strength to expectations that the Federal Reserve Bank will begin tapering its asset purchases by the end of this year. The Department of Commerce in the United States said that new home sales climbed to a five-year high in June, up by 8.3% to a seasonally adjusted annual number of 497 000 units, which was the highest number since May 2008.

Elsewhere, the kiwi dollar traded higher against the euro, as EUR/NZD cross dropped by 0.57% to reach 1.6523.