New Zealand falls below US$0.59 on the back of US dollar optimism

Key Movers

The US Dollar Index (DXY), which measures the value of the US dollar against a basket of currencies, trades near 100.00 on Thursday, lifting modestly by upbeat US data and expectations of extended yield differentials. US jobless claims fell to 228,000, beating market expectations and suggesting Labor market strength. US Treasury yields remain supported with the 10-year note at 4.345%, ahead of a $39 billion auction and FOMC communication expected next week. Gold surged to $3,400 per ounce as investors hedged against lingering trade tensions and muted USD upside despite central bank divergence.

The Bank of England has cut its key interest rate by 25 basis points to 4.25%, marking its fourth reduction in less than a year as policymakers respond to sluggish economic growth, cooling inflation and global trade turbulence triggered by U.S. tariffs. The Monetary Policy Committee (MPC) was split in its decision: five members voted for the 0.25-point cut, two wanted a deeper reduction to 4.0% and two preferred to hold rates steady. Governor Andrew Bailey described the outlook as “gradual and careful” and signalled more easing could follow, though without committing to a timetable. The decision to cut rates was supported by falling inflation, which eased to 2.6% in March. However, the Bank expects a temporary spike to 3.5% this year due to regulated hikes in household energy and water bills. It now sees inflation returning to its 2% target by early 2027 - nine months sooner than previously forecast.