- Norwegian crown climbs after Norges Bank removes easing bias
- Kiwi dollar sees best day in a month after cbank meeting
- Little sign of concern at appreciation from Reserve Bank
- Yen gains as oil falls weaken global appetite for risk
The Norwegian crown and the New Zealand dollar were the main movers in an otherwise dormant market in major global currencies on Thursday, both getting a lift on talk from the policy meetings of their countries’ respective central banks.
With European stock markets down for a third day, investors sought the traditional security of the yen, pushing it around 0.1 percent higher against both the euro and the dollar by afternoon in London.
Norway’s central bank lifted its rate forecasts for 2017 and 2018 and said a cut in interest rates was no longer likely, pushing the Norwegian crown, also known as the “Nokkie” by traders, half a percent higher against the dollar and the euro.
It last stood up 0.4 percent at 8.4987 crowns per dollar and 9.4853 crowns per euro.
“It’s (the move) is all about the change in their rate path – no longer seeing a possible probability of a rate cut but now moving their rate path unchanged for this year, next year, and then higher in 2019,” said Niels Christensen, currency strategist with Nordea in Copenhagen.
“That’s obviously a strong signal and the reason why we see a stronger Norwegian crown.”
Dealers said “short” bets against the kiwi had been squeezed after the New Zealand central bank sounded several upbeat notes on the outlook for growth and impact of current exchange rates.
A number of banks had been calling for more gains for the kiwi around the meeting, arguing that a 3 percent gain since May still leaves it well undervalued compared to long-term measures of fair value and others in the commodities currencies bloc more exposed to falling oil prices.
“While the RBNZ kept a neutral stance and continued to pledge to keep rates low for a long time, it did not complain strongly about the currency’s recent strength, which caused the New Zealand dollar to rise post the decision,” analysts from Credit Agricole said in a morning note.
By 1142 GMT, the kiwi was up 0.4 percent to $0.7245.
It was also around 0.5 percent higher against both the Aussie and Canadian dollars – both currencies that tend to be closely dependent on the prices of oil and other major commodities.
After a dip in the past week, however, there was little sign of more pain for the group, as Brent crude recovered after falling below $45 a barrel overnight. The Aussie and the Canadian dollar were both 0.2 percent higher against their U.S. counterpart.
In an updated outlook for the year ahead published on Thursday, Barclays called for the kiwi to gain almost 5 percent against the Aussie over the next year.
“The NZD has performed well despite RBNZ trying to dampen expectations of an early rate rise,” the British bank said.
“Strong net permanent and long-term migration is helping to support domestic activity and lift business sentiment, but also… dampening wage pressures. If the RBNZ were to raise rates faster than expected in 2018, the NZD could outperform.”
The dollar index, which measures the greenback against a basket of six major currencies, was roughly flat at 97.589, having retreated from a one-month high of 97.871 set on Tuesday.
The euro was less than 0.1 percent lower at $1.1159. (Editing by Alison Williams and Pritha Sarkar)