Forexpros — The New Zealand dollar dipped against its U.S. counterpart on Wednesday, as concerns over the global economic recovery reduced demand for growth-linked currencies, but losses were limited after the Federal Reserve pledged to keep rates at ultra-low levels for an extended period.
NZD/USD pulled back from 0.8415, the highest since August 8, to hit 0.8351 during late Asian trade, shedding 0.26% on the day.
The pair was likely to find short-term support at 0.7961, Tuesday’s low and three-month low and short-term resistance at 0.8465, the high of August 5.
The Federal Reserve pledged on Tuesday to keep its benchmark interest rate at an all-time low, adding that it will maintain a loose monetary policy until “at least through mid-2013.”
In a statement, the Fed said growth was much slower than expected and the labor market had deteriorated, underlining concerns over the U.S. economic outlook.
“The FOMC now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually” from the July level of 9.1%, the statement said.
The Fed also indicated that it “discussed the range of policy tools available to promote a strong economic outlook recovery in a context of price stability” and said it was prepared to employ the tools “as appropriate”.
Meanwhile, official data published earlier showed that China’s trade surplus widened to USD31.5 billion in July, the highest level in more than two years. Analysts had expected China’s trade surplus to widen to USD27.4 billion.
The report showed that Chinese imports rose 22.9% to USD143.6 billion, while exports climbed 20.4% to a record high USD175.1 billion. China is New Zealand’s second largest trade partner.
The kiwi was also lower against its Australian cousin, with AUD/NZD climbing 0.28% to hit 1.2403.
Later in the day, the U.S. was to produce data on the federal budget balance as well as reports on crude oil stockpiles and wholesale inventories.
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