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Further pressure was added from the disappointing GDP figures this morning.
New Zealand’s economic growth in Q3 was at 3.2% year-on-year, down from 3.9% in Q2.
NZD/USD was already facing some weakness after yesterday’s data showed that the current account deficit widened to $5.01 billion in Q3, from $1.08 billion in Q2.
The divergence between the pair had widened due to the release of the Federal Open Market Committee (FOMC) meeting minutes.
The hawkish overtones of the FOMC’s statement sparked a rally in the greenback.
From a fundamental perspective, further weakness in the Kiwi dollar can be expected. Amid falling commodity prices and sluggish export demands, New Zealand’s central bank has been reiterating that the high level of the kiwi dollar was unjustifiable and unsustainable.
On a daily chart, NZD/USD appears to be trading between downward channels and respecting the trend lines. Immediate support is seen at the one-year low of 0.7660 recorded earlier this month, while the 0.7800 area might offer resistance on the upside.
Further improvement in tonight’s US initial jobless claims (9.30pm Singapore time) and Services PMI (10.45pm Singapore time) will see the downward momentum accelerating.