The New Zealand dollar weakened against the other major currencies in the Asian session on Wednesday amid risk aversion, tracking the weak lead overnight from Wall Street as upbeat U.S. economic data spurred concerns of an interest rate hike sooner rather than later. Additionally, a stronger U.S. dollar dragged down most commodity prices and weighed on resource stocks.
Home prices in major U.S. metropolitan areas continued to show notable annual growth in the month of March, a report from Standard & Poor’s showed Tuesday. The 20-City Composite Home Price Index rose 5.0 percent year-over-year in March, unchanged from the annual growth seen in February. Economists expected the rate of growth to slow to 4.6 percent.
Further, a Commerce Department report showed U.S. new home sales rebounded more than expected in April, following the pullback seen in the previous month. New home sales climbed 6.8 percent to an annual rate of 517,000 in April from the revised March rate of 484,000. Economists expected new home sales to rise to a rate of 509,000 from the 481,000 originally reported for the previous month.
The consumer confidence in the U.S. improved modestly in May after declining sharply in April, the Conference Board said. The consumer confidence index rose to 95.4 in May from a downwardly revised 94.3 in April. Economists expected the index to dip to 95.0 from the 95.2 originally reported for the previous month.
A separate report from the Commerce Department showed a modest decline in new orders for U.S. manufactured durable goods in April, largely reflecting a pullback in orders for transportation equipment. Durable goods orders dipped 0.5 percent in April, but came in line with economists’ estimate.
Meanwhile, investors also remained focused on financial and political developments in Greece and Spain.
Amid ongoing concerns over Greece, the country is expected to make a 300 million euros payment to the International Monetary Fund next week.
Sentiment was also impacted by political uncertainty in Spain, where Prime Minister Mariano Rajoy’s Popular Party suffered its worst result in 20 years in a municipal election, as the voters punished his government for four years of austerity and a raft of corruption scandals before a general election due in November.
Traders await the world’s largest dairy exporter, Fonterra, to provide its first payout forecast for the upcoming season, due on Thursday. Analysts expect a pull back in prices for dairy products for the upcoming season.
Tuesday, the NZ dollar showed mixed trading against its major rivals. While the NZ dollar rose against the yen, the euro and the Australian dollar, it fell against the U.S. dollar.
In the Asian trading today, the NZ dollar fell to more than a 2-1/2-month low of 0.7216 against the U.S. dollar, from an early high of 0.7250. On the downside, 0.70 is seen as the next support level for the kiwi.
Pulling away from an early high of 89.17 against the yen, the kiwi dropped to 88.91. The kiwi may test support near the 87.00 region.
The members of the Bank of Japan’s monetary policy committee were satisfied that the current stance for monetary policy remained appropriate, minutes from the bank’s April 30 meeting revealed today.
The underlying inflation trend was improving steadily, the minutes showed, although there was some debate about achieving the target goal of 2 percent. At the meeting, the bank kept its benchmark interest rate unchanged at 0.1 percent, and also said it will continue to increase the monetary base at an annual pace of about JPY 80 trillion.
Against the euro and the Australian dollar, the kiwi edged down to 1.5056 and 1.0704 from yesterday’s closing quotes of 1.5033 and 1.0678, respectively. If the kiwi extends its downtrend, it is likely to find support around 1.55 against the euro and 1.10 against the aussie.
Looking ahead, Swiss UBS consumption indicator for April and German consumer confidence survey results for June are set to be published at 2:00 am ET.
The Bank of Canada will announce its interest rate decision at 10:00 am ET. Economists expect the bank to retain interest rates unchanged at 0.75 percent.
Finance ministers and central bankers from 7 industrialized nations will begin a three-day meeting in Dresden, Germany today to address faltering global growth.
The material has been provided by InstaForex Company – www.instaforex.com