Forexpros – The New Zealand dollar was sharply lower against its U.S. counterpart on Tuesday, as risk sentiment weakened after ratings agency Standard & Poor’s put 15 euro zone countries on watch for downgrades.
NZD/USD hit 0.7740 during late Asian trade, the pair’s lowest since December 1; the pair subsequently consolidated at 0.7742, dropping 0.80%.
The pair was likely to find support 0.7669, the low of November 15 and resistance at 0.7870, the high of November 11.
The kiwi came under pressure after S&P said it may carry out a mass credit downgrade of euro zone countries if their leaders fail to move decisively on solving the region’s debt woes at Friday’s key economic summit.
The warning came after German Chancellor Angela Merkel and French President Nicolas Sarkozy unveiled a common platform that aims to halt the region’s debt crisis. The plan calls for automatic penalties for deficit violators and locking limits on debt into euro zone states’ constitutions.
The Franco-German initiative is to be presented at this week’s EU summit and concluded by March 2012.
Meanwhile, the kiwi was higher against the Australian dollar with AUD/NZD shedding 0.25%, to trade at 1.3130.
Also Tuesday, the Reserve Bank of Australia cut its interest rate for the second successive month from 4.50% to 4.25%.
Commenting on the decision, RBA Governor Glenn Stevens said that fiscal conditions have been more difficult, particularly in the euro zone and this was likely to weigh on global growth.
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