The New Zealand dollar hit a five-month low on Thursday as the country's central bank wrongfooted hawks by keeping interest rates steady and saying the next move might be a cut or a hike. The kiwi dollar went as deep as $0.6934, a level not seen since early December, after the Reserve Bank of New Zealand (RBNZ) held rates at a record low 1.75 percent and trimmed its inflation forecasts a little.
"The direction of our next move is equally balanced, up or down. Only time and events will tell," Governor Adrian Orr said in a statement accompanying his first monetary policy decision since he took the helm in March. New Zealand government bonds rose, sending yields down 2.5 basis points at the long-end and 2-3 basis points at the short-end of the curve.
The Australian dollar was unchanged at $0.7460 after two straight sessions of losses. It went as low as $0.7413 on Wednesday, a level last visited in June 2017. The Aussie has been on a slippery slope since late April largely due to a surge in the greenback as US economic indicators outpaced much of the advanced world and forced traders to unwind short-dollar positions.
Australian government bond futures slipped, with the three-year bond contract off 1.5 ticks at 97.775. The 10-year contract slipped 2 ticks to 97.1850. Westpac economist Imre Speizer said the new line "is a slightly dovish development." The decision was closely watched as economists and investors sought to discern how Orr would handle a new policy goal of "maximising sustainable employment" alongside traditional inflation targeting. The kiwi was last down 0.7 percent at $0.6942.
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