NZD/USD retreats from weekly highs, steadies near 0.6800

The NZD/USD pair rose sharply during the Asian session on Wednesday after the RBNZ announced its decision to leave the Official Cash Rate (OCR) unchanged at 1.75%. Commenting on the policy and economic outlook, Governor Adrian Orr said that the risks around rates were balanced and added that the chance of a rate cut had not increased. After advancing to a fresh weekly high of 0.6852, the pair lost its traction in the second half and erased some of its early gains. As of writing, the pair was trading at 0.6795, still adding 0.83% on a daily basis.

While testifying before the Finance and Expenditure Select Committee, in Wellington, RBNZ Governor Orr echoed yesterday's message and didn't offer any new comments on the policy outlook. Commenting on the market reaction to the RBNZ statement, "The reaction to today’s Monetary Policy Statement indicates that financial markets saw the missive as being more hawkish than anticipated. The NZD is up over 1.0% and the chance of a near term cut in interest rates has been significantly reduced," said the NAB Research Team. 

In addition to the RBNZ's optimistic outlook, hopes of the U.S. and China reaching a trade agreement even if President Trump doesn't meet his Chinese counterpart ahead of the March 1 deadline provided an additional lift to antipodean currencies.

Meanwhile, supported by the rising T-bond yields and today's inflation report, the US Dollar Index erased the losses it suffered yesterday and rose to its highest level since mid-December at 97.17 to force the pair to move below the 0.68 mark.

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