New Zealand Dollar Rallies After Poor US Data

The New Zealand dollar rallied today on the back of the US dollar’s weakness even though news from the South Pacific nation itself was rather detrimental to the kiwi.
US retail sales were flat in April, frustrating market participants who counted on an increase. This led to jump of the New Zealand dollar against its US counterpart as well as versus other majors.
The kiwi was rising earlier as well even though the currency was under pressure from the Financial Stability Report that said:

Although there has been a helpful depreciation in the exchange rate in recent weeks, Reserve Bank analysis suggests that the real exchange rate, on a trade weighted basis, is above its sustainable level. This implies that the NZD could fall sharply if current benign conditions in global markets reverse, resulting in a reduction in appetite for NZD-denominated assets.

Graeme Wheeler, Governor of the Reserve Bank of New Zealand, did not speak about the future of monetary policy during the press-conference that followed the report, leaving such topic for the June policy meeting. Still, there are plenty of speculations among economists, and some of them suggest that the central bank may cut interest rate in September. Such outlook is also negative for the New Zealand currency.
NZD/USD rallied from 0.7359 to 0.7481 as of 13:53 GMT today. NZD/JPY climbed from 88.22 to 88.24 while EUR/NZD dropped from 1.5220 to 1.5136.

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