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Dollar rebounds as investors heed hawkish reminder from New Zealand

  • Dollar rallies after sharp drop on Tuesday
  • RBNZ raises policy rate 50 bps
  • NZ move dims hopes of slowdown in rate rises globally

SYDNEY/LONDON, Oct 5 (Reuters) – The dollar rose on Wednesday, a day after suffering its biggest one-day drop in more than two years, as the excitement of the previous day’s rally in stocks and risk friendlier currencies wore off.

The dollar index was last up 0.54% to 110.77, after tumbling 1.3% on Tuesday. The index, which measures the greenback against a basket of major currencies, has fallen just under 4% since touching a 20-year high of 114.78 last week.

In Europe, the euro fell 0.59% to $0.993 after rising 1.7% on Tuesday. Sterling was down 0.8% to $1.1385, ending a solid streak which saw it rise for six straight sessions.

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Recent gains for most major currencies against the dollar have been underpinned by hope among investors and traders that the…

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