Investing.com – The New Zealand dollar rose against its U.S. counterpart on Wednesday, even as the Reserve Bank of New Zealand said the nation’s currency remains “elevated”, while demand for the greenback remained supported by optimism over the U.S. economic recovery.
NZD/USD hit 0.7866 during late Asian trade, the pair’s highest since October 31; the pair subsequently consolidated at 0.7866, gaining 0.76%.
The pair was likely to find support at 0.7710, Tuesday’s low and resistance at 0.7978, the high of October 29.
The kiwi shrugged off comments by RBNZ Governor Graeme Wheeler saying that “the exchange rate is unjustified and unsustainable”.
“Further increases in short-term interest rates may be required in coming years,” Wheeler added.
The comments followed the release of the RBNZ’s biannual Financial Stability Report, in which the central bank said it won’t relax mortgage lending restrictions for now as surging immigration and low borrowing costs could re-ignite the housing market.
Meanwhile, the greenback found mild support after falling in the previous two sessions after Friday’s softer than expected U.S. jobs report prompted investors to book profits in the greenback.
The U.S. dollar has rallied over the past two months as broadly stronger economic data fuelled expectations that the Federal Reserve will raise interest rates sometime in 2015.
The kiwi was also higher against the euro, with EUR/NZD dropping 0.60% to 1.5881.