The Reserve Bank of New Zealand left interest rates unchanged at 1.0% as widely expected in its first monetary policy meeting this year. The committee surprised market participants by not mentioning any interest rate cuts this year. Alternatively, the bank stated that low-interest rates were needed to support inflation and unemployment to reach the needed levels. The NZDUSD soared to $0.6476, the EURNZD tumbled to a two-week low of 1.6857, and the GBPNZD dropped to 2.0019.
The dollar index, which measures the greenback against a basket of major currencies, faltered at a four-month high of 98.95, declined to 98.71 to put an end to a six-day winning streak. The Federal Reserve Chairman Jerome Powell testified on the semiannual monetary policy report before the House Financial Services Committee. He affirmed that the current policy is appropriate as long as economic data match Fed's outlook, and stated that the economic activity expanded at a moderate pace in the 2nd half of 2019, and the economy showed resilience to global headwinds. Powell confirmed that the Fed is going to continue bill purchases and repo operations into the second quarter. Market participants are looking forward to his testimony today before the Senate Banking Committee.
Gold prices held steady above $1560 awaiting fresh fundamental drivers. Today, China announced the least new virus cases since late January, which helped to pick up risk sentiment. Meanwhile, the price of a silver ounce declined to $17.50, and palladium futures hovered near $2260.
Oil prices rose for the second day as new virus cases signaled possible containment. China announced the least new virus cases since late January, and the recovery rate edged higher rapidly, easing investors' fears over a bigger outbreak, which could affect the economic activity further and weigh on oil demand levels. The West Texas Intermediate crude rose to 50.88, and Brent inched higher to $55.38. Later on the day, the US Energy Information Administration will report the official weekly crude oil report, which would likely have an impact on prices.