By Gina Lee
Investing.com – The dollar was down on Wednesday morning in Asia, while the New Zealand dollar (NZD) was up after the Reserve Bank of New Zealand (RBNZ) handed down its latest policy decision.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.08% to 93.073 by 11:51 PM ET (3:51 AM GMT).
The USD/JPY pair inched up 0.05% to 109.62.
The AUD/USD pair was up 0.23% to 0.7265 and the NZD/USD pair was up 0.28% to 0.6943.
The USD/CNY pair inched down 0.03% to 6.4835 while the GBP/USD pair edged up 0.12% to 1.3756.
RNBZ kept its interest rate unchanged at 0.25% earlier in the day as it handed down its policy decision. The central bank was forced to postpone its plans to hike interest rates as New Zealand went into lockdown following the first local COVID-19 infection in six months.
“RBNZ was ready to pull the trigger, COVID-19 comes along 24 hours earlier and so they’ve just pulled back on that,” BNZ senior market strategist Jason Wong told Reuters.
Investors are now pricing a 60% chance of a hike in October.
"It depends on COVID-19 now... if this lockdown's short, then rate hikes are on the table, but there's always going to be a half-chance it continues longer and the market's not willing to price a hike,” said Wong.
However, other investors had the focus elsewhere.
“The dollar is being supported by the nervous risk environment... markets are paying attention to the COVID-19 Delta variant and the area which is of most concern seems to be China," Bank of Singapore currency analyst Moh Siong Sim told Reuters.
"There's a stock market that's taken a bit of a beating recently, there's regulatory risk and now there are COVID-19 outbreaks in China. Does this all add up to say that we should be paying a lot more attention to downside risks in China?" he added.
Investors are now looking to the minutes from the U.S. Federal Reserve’s latest meeting, due to be released later in the day, for clues to the central bank’s timeline for asset tapering and interest rate hikes. The Fed will also hold its Jackson Hole symposium in the following week, which could also provide more clues.