The New Zealand dollar dropped to one-week lows against its U.S. counterpart on Thursday, weighed by the release of disappointing economic growth data out of New Zealand, while the Federal Reserve indicated that rates could rise as soon as next year. NZD/USD hit 0.8522 during late Asian trade, the pairs lowest since March 13; the pair subsequently consolidated at 0.8536, sliding 0.27%. The pair was likely to find support at 0.8451, the low of March 11 and resistance at 0.8573, the high of March 17. Official data earlier showed that New Zealands gross domestic product rose by 0.9% in the fourth quarter, confounding expectations for an expansion of 1%. New Zealands GDP in the three months to September was revised down to a 1.2% rise from a previously estimated 1.4% increase. Meanwhile, the greenback found support after the Fed said it would reduce its monthly bond purchases by an additional $10 billion to $55 billion. At the conclusion of the central banks two-day policy setting meeting on Wednesday, Fed Chair Janet Yellen indicated that the bank could begin to raise interest rates about six months after the bond-buying program winds up, which is expected to happen this fall. The Fed statement also emphasized that economic conditions could mean that rates would remain on hold at record lows for some time, even after inflation and employment return to their longer-run trends. The central bank also updated its forward guidance, discarding the 6.5% unemployment threshold for considering when to increase borrowing costs and said it will look at a wide range of information. The kiwi was lower against the euro, with EUR/NZD gaining 0.35% to 1.6212. Later in the day, the U.S. was to publish the weekly report on initial jobless claims, as well as data on existing home sales and manufacturing activity in the Philadelphia region.
Posted on: Thu, 20 Mar 2014 08:33:24 +0000
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