Anna 
Most Asian currencies remained within a narrow range on Wednesday as the dollar stabilized, with investors awaiting more insights on U.S. interest rates from the minutes of the Federal Reserve’s recent meeting.
However, the New Zealand dollar stood out, climbing significantly after the Reserve Bank of New Zealand (RBNZ) adopted a somewhat hawkish stance during its May meeting.
Despite the New Zealand dollar’s rally, overall sentiment in the region was tempered by diminishing optimism regarding China’s economic outlook and concerns over prolonged high U.S. interest rates. Cautious overnight comments from Federal Reserve officials further subdued market sentiment.
The New Zealand dollar’s NZDUSD pair jumped as much as 0.9%, reaching its highest level in over two months on Wednesday. This surge followed the RBNZ’s indication that potential interest rate cuts could be delayed due to persistent inflation.
While the RBNZ kept its official cash rate unchanged as expected, it noted that sticky inflation—driven primarily by tight labor conditions and high service prices—would likely postpone any plans for rate reductions. Bloomberg data indicated that traders were now anticipating rate cuts to commence later in 2025.
Despite acknowledging the slow pace of easing inflation, the RBNZ projected that price pressures would align with its target range of 1% to 3% by the end of 2024.
