The New Zealand dollar continues its downside movement against its U.S. counterpart, as the investors cut their bets for the Reserve Bank of New Zealand to increase interest rates during the first half of the year. The NZD/USD pair was also pressured by fears over the global economic outlook and risk aversion.
Consumer prices in New Zealand slowed during the first quarter of the year, supporting the argument that the Reserve Bank of New Zealand won’t increase rates at this time.
The New Zealand dollar is one of the worst performing versus the Japanese yen on concern Greece won’t be able to avoid defaulting and the extending pessimism after S&P downgraded the outlook on US credit rating to “negative”.
The NZD/USD dropped as losses in commodities and stocks sapped demand for higher-yielding assets.
The European debt crisis is the main reason behind rising risk aversion, that’s really the main factor contributing to kiwi’s decline at the time being.
Investors are targeting safe heaven assets such the Japanese yen and Swiss currency amid the European’s debt crisis.
The U.S economy is to release more housing data with existing home sales for March at 14:00 GMT. Home sales are expected at 5.00 million with 2.5 percent rise reversing higher from the previous 9.6% slump.
The U.S. housing data is anticipated to show some improvement during March, which could help ease risk aversion and mounting woes over the outlook for the recovery which in return will ease kiwi’s losses if the market turned to focus on upbeat data.
The rest of the week there is no data from the New Zealand economy, but the world’s largest economy will release data that will continue to influence the pair’s movement amid the prevailing bearish sentiment.
Originally posted here
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