New Zealand's central bank surprises by standing pat

The New Zealand dollar soared 1% on Wednesday after the country's central bank unexpectedly left interest rates on hold, while most other currencies trod water.

"It's flying. Massive surprise," said Imre Speizer, head of New Zealand strategy at Westpac Bank in Auckland. "There's a lot of position exiting going on."

Almost all analysts had forecast a cut in the 1% benchmark rate to a record-low 0.75%, with futures markets having priced in a better-than75% chance of a cut as slack spending and a global slowdown held New Zealand's economic growth at a six-year low. The kiwi NZD zoomed almost a cent higher to $0.6403 after the decision was announced, putting it on track for its steepest daily gain in a year. Yields on two-year New Zealand bonds NZ2YT=RR jumped by their most in more than two years.

The Reserve Bank of New Zealand said aggressive easing earlier this year meant current settings were appropriate, but left the door open for more stimulus. The kiwi later gave up some of its gains to settle around $0.6395, and moves elsewhere in Asian hours were modest. "It's all been about the New Zealand dollar," said Commonwealth Bank FX analyst Joe Capurso.

Against other currencies, the U.S. dollar was only a touch weaker after U.S. President Donald Trump said in a speech overnight that a trade deal with China was "close," but failed to provide any further details. Hopes for an imminent deal to wind back tit-for-tat tariffs the world's two largest economies have imposed on each other have lifted the dollar 1% this week to a one-month high of 98.423 overnight against a basket of currencies .DXY.

It was a touch below that level in Asian trade, though moves were slight as investors waited for more concrete news. Trump's speech at the Economic Club of New York mostly reprised well-worn criticism of the U.S. Federal Reserve for failing to cut interest rates deeply enough and rhetoric about China's "cheating" on trade.