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SINGAPORE: The euro was pinned to a five-week low on Wednesday as prospects for peace in Ukraine seemed to darken, while the kiwi was boosted when New Zealand’s central bank delivered its steepest rate hike in two decades.

The Bank of Canada meets later on Wednesday and is also expected to deliver a 50-bp hike as policymakers around the world start hastening efforts to contain inflation.

The kiwi flickered as high as $0.6902 after the Reserve Bank of New Zealand lifted its official cash rate (OCR) by 50 basis points to 1.5%.

But the currency couldn’t break resistance around its 200-day moving average, and settled below it at $0.6867, as the central bank framed its actions as pulling forward hikes without changing its outlook.

“This ‘stitch in time’ approach is consistent with near-term financial market pricing,” policymakers said in the meeting minutes, which were released with their decision.

Analysts reckoned support for the currency might be shortlived.

“It’s sort of a dovish 50-point hike,” said Jason Wong, senior markets strategist at BNZ in Wellingon.

“They’re saying it’s just a bringing forward of a hike and the RBNZ hasn’t really changed it’s view on the OCR outlook from the February statement,” he added, noting that the market has a far more hawkish peak rate forecast than the central bank does.

Elsewhere, traders were unmoved by a slight stiffening in Japanese officials’ language about the fast-weakening yen, which was under considerable pressure at 125.62 per dollar, within a whisker of breaking a major support level at 125.86.

Euro slips vs dollar ahead of expected red-hot US inflation

Finance Minister Shunichi Suzuki said the government was watching currency moves with a sense of urgency.

The yen had enjoyed a moment’s respite overnight when cooler-than-expected U.S. inflation data set bonds rallying and investors hoping that price pressures might have peaked.

A second straight monthly decline in prices of used cars held core CPI to a 0.3% gain in March, against an expected 0.5% rise. But, since headline annual inflation nevertheless came in at an eyewatering 8.5% and rapid rate hikes still loom, it wasn’t enough to drive investors out of dollars.

Russian President Vladimir Putin’s description of on-and-off peace negotiations as “a dead-end situation” on Tuesday also put a weight on the euro and sterling, which have been vulnerable to concern about the war’s economic fallout.

The euro dropped to $1.0821 overnight and hovered nearby at $1.0835 in the Asian session. Sterling, which has been pegged near $1.30, held at $1.3011.

The Australian dollar, at $0.7469, held overnight gains made with a bounce in oil prices.

The Canadian dollar firmed through its 200-day moving average to C$1.2614 in Asia, though traders are jittery ahead of the Bank of Canada meeting, especially as the market is slightly short USD/CAD.

“I think the risk around the Bank of Canada meeting is that they sound balanced enough to trigger a wipeout of USD/CAD shorts,” said Brent Donnelly, president at analytics firm Spectra Markets.

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