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Dollar Down, RBNZ Hands Down Biggest Rate Hike in 22 Years -Breaking

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© Reuters

By Gina Lee

Investing.com – The dollar was down on Wednesday morning in Asia, with the euro stuck at a five-week low as the war in Ukraine shows no sign of ending anytime soon. Investors also digested the Reserve Bank of New Zealand (RBNZ)’s in 22 years.

By 11:39 ET (03:39 GMT), the that monitors the greenback against other currencies had dropped 0.04% to 100.250

This pair edged up 0.6% to 125.56

Both the pair grew by 0.044% to 0.7462, while they fell by 0.033% to 0.6847.

This pair dropped 0.01%, to 6.3653, as China released its most recent trade data earlier today.

This pair increased by 0.09% to 1.3009.

hiked its interest rate to 1.5% as it handed down its policy decision earlier in the day, adding that “the committee agreed that their policy ‘path of least regret’ is to increase the OCR by more now, rather than later, to head off rising inflation expectations. The committee believes it is appropriate to keep tightening monetary policies at a steady pace.

Investors had expected that the central bank would continue tightening.

“The RBNZ’s decision to accelerate its hiking cycle shows it is willing to move decisively to get a hand on surging inflation,” Capital Economics economist Ben Udy told Bloomberg.

“We expect it to hike the OCR to 3% by the end of 2022.”

Later in the day the will issue its policy decision, and then the on Thursday.

Europe’s hopes of a peaceful resolution to the conflict in Ukraine that was precipitated by Russia’s invasion on February 24th quickly waned after Vladimir Putin, the Russian President, declared peace negotiations “a dead-end scenario” overnight. While the Euro is sensitive to economic concerns, it fell to $1.0821 after being pushed to an all-time low in Asia trade.

The U.S. dollar also cooled a recent rally as investors digested Tuesday’s inflation data from the U.S. and hoped that price pressures have peaked.

Data showed that March’s consumer price index (CPI), rose 8.5%, which was its highest reading since 1982. CPI rose by 1.2%, core CPI rose by 6.5%, and 0.3% respectively.

The U.S. yields were lowered by the inflation data, which provided some relief for the bond market. It also gave the yen a short boost. However, as the CPI figure was the highest since late 1981 and the Fed looks to quicken the pace of interest rate hikes, the dollar’s fall was small.

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