NZD/USD slipped in Asian trade on Friday, giving back part of the prior
session's gains and ending a rebound from a two-week low. The pair traded around
0.5625 to 0.5630 and looked set for its first meaningful weekly decline in about
three weeks after the RBNZ unexpectedly held the official cash rate at 2.75%,
disappointing investors who had priced a near-certain 25bp hike. Four
policymakers, including the governor, prefer to wait to assess the lagged
effects of July and September hikes; the decision outweighed the MPC's overall
tightening bias and pressured the New Zealand dollar. Ongoing dollar selling for
a third session limited NZD downside, while elevated oil prices are keeping
inflation concerns alive and reinforcing expectations the Fed will remain
hawkish, which may cap further dollar weakness.
