Read for 4 minutes (Reuters) – SINGAPORE (Reuters) – The dollar fell on Tuesday, with the kiwi rising the most among major currencies, as investors pushed up expectations for a rate hike in New Zealand following a solid business survey, while pressure on the US to hike rates eased in the wake of mixed jobs data. A banker counts US dollars at a bank in Westminster, Colorado, in this file photo. Wednesday, November 3, 2009. Rick Wilking/REUTERS/File Photo The pound surged 0.3 percent to $1.3888, a one-week high, as investors anticipated England being the first major country to publicly begin living with the coronavirus by removing COVID-related restrictions in a fortnight. The euro increased by 0.1 percent to $1.1872, while the yen increased by roughly the same amount to 110.83 per dollar. The New Zealand dollar climbed as high as $0.7035, up 0.8 percent. The Australian dollar increased 0.5 percent to $0.7563, but the Reserve Bank of Australia kept rates steady and reduced bond purchases, as predicted. The changes extended the dollar’s decline since last week’s positive but not too so U.S. labor market statistics, which raised the possibility of the Federal Reserve beginning to trim its asset purchases sooner than expected. “I think the market is just relieved,” said Moh Siong Sim, a currency analyst at the Bank of Singapore. “We’re seeing a little bit of a dollar pullback now that the (US jobs report) is out of the way. I don’t believe there will be a significant dollar drop, but the next catalyst to worry about – U.S. jobs or inflation – is still a long way off.” In the meantime, market pricing in New Zealand is rapidly changing. After a business report revealed a dramatic improvement in mood and a caution on labor supply, bonds were reeling and the kiwi soared over its 20-day and 200-day moving averages. Businesses stated times were good and they had boosted prices because of the closed borders and COVID-free populace, but they had never had such a difficult time finding labor, causing economists at two local banks to expect rate hikes in November. “It is evident that record levels of monetary stimulus are no longer required to maintain the economy, and inflation risks are becoming uncomfortably high,” ASB economist Jane Turner wrote in a report that pushed up projection hikes from May. The kiwi also hit a one-month high versus the Australian dollar, indicating a growing disparity between the Reserve Bank of New Zealand’s pressures and its tone. On Tuesday, Australia’s central bank said that it will cut bond purchases, as predicted, but that its cash rate would remain at a record low of 0.1 percent until 2024. “The RBNZ has traditionally been one of the more hawkish central banks in recent years, but that recommendation to delay a rate hike until 2021 just emphasizes the disparity between the RBA and the RBNZ,” Commonwealth Bank of Australia strategist Kim Mundy said. “The economic prognosis in both countries is pretty similar, but one central bank may be about to make a decision three years before the other.” The Reserve Bank of New Zealand will meet next week. In other parts of the world, a dramatic jump in oil prices following the collapse of producer talks over supply levels boosted exporter currencies like the Norwegian crown and the Canadian dollar. A U.S. services poll and a German attitude survey will be released later in the day, when U.S. markets return from their holiday break. The minutes from the Federal Reserve’s June meeting, in which it issued an aggressive prediction for rate hikes in 2023, could shed more light on the shift in thinking on Wednesday. Tom Westbrook contributed reporting, while Shri Navaratnam and Kim Coghill edited the piece./n
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