New Zealand Dollar (NZD) Exchange Rate Drifts Lower, NZD/USD Below 85 Cents
As the week continues the New Zealand Dollar remains weaker against several of its most traded counterparts, including the US Dollar, British Pound and Australian Dollar.
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The ‘Kiwi’ Dollar came under pressure yesterday as measures of business confidence and activity outlook for New Zealand fell short of expected levels.
The South Pacific asset also softened as Fonterra, the world’s largest dairy exporter, negatively revised its forecast for payouts to farmers.
While there was a lack of economic developments in New Zealand overnight, a risk-off environment (inspired by renewed violence in Ukraine) and technical indicators left the ‘Kiwi’ trending lower.
According to Bloomberg News, analysis indicates that the ‘Kiwi’ could decline further in the weeks ahead, and now that the currency has fallen below the 85 cents resistance level technical analyst George Davis foresees the New Zealand Dollar dipping to 84.14 US cents.
Davis was quoted as saying; ‘The recent sideways consolidation in the NZD/USD has given way to a downside breakout.’
The New Zealand Dollar hit a two-month low against the US Dollar on Wednesday and was the only major currency to fail to advance on the Pound.
In the view of industry expert Tim Kelleher; ‘We saw some very heavy selling on the London open last night, which was a combination of further disappointment on the Fonterra numbers, even though they were on expectations, and the business confidence being weaker as well. So what we saw was some mature longs that had been around for probably a number of months finally getting out of their positions.’
The ‘Kiwi’ also adopted a bearish relationship with the Australian Dollar during the South Pacific session as the ‘Aussie’ was boosted by a report detailing an unexpectedly strong level of investment in the domestic manufacturing sector.
Over the course of European trading the NZD/GBP pairing was little effected by the publication of the UK Lloyds business barometer.
The gauge showed a decline from 66 to 41 in May.
Later today considerable movement could be on the cards for the NZD/USD exchange rate. The US is set to publish revised first quarter growth figures, and if the modest annualised growth of 0.1 per cent initially recorded is negatively revised to contraction of 0.5 per cent the US Dollar could post broad-based declines.
Before the weekend the New Zealand Dollar’s performance could be effected by domestic building permits data, due out at 23:45 GMT.
The data is expected to show a 3.5 per cent decline in building permits in April on a month-on-month basis.
Building permits increased by 8.3 per cent in March.
The New Zealand Dollar is currently trading against the British Pound in the region of 0.5078 and is trading against the US Dollar in the region of 0.8506.