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Forex - NZD/USD off 3-month low as risk aversion eases

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Forexpros - The New Zealand dollar pared sharp losses against its U.S. counterpart on Tuesday, easing off a three-month low as risk sentiment recovered following the previous day's rout in global markets.

NZD/USD pulled back from 0.7961, the pair's lowest since May 25, to hit 0.8191 during late Asian trade, shedding 0.18% on the day.

The pair was likely to find short-term support at 0.7961, the daily low and three-month low and resistance at 0.8431, Monday's high.

The kiwi weakened earlier after a report from China's National Bureau of Statistics showed that consumer price inflation rose by a seasonally adjusted 6.5% in July, the fastest since June 2008.

The report also showed that producer price inflation rose by a widely expected 7.5% in July, after climbing by 7.1% in the previous month.

The stronger-than-expected inflation data dampened hopes that the world's second largest economy would loosen monetary policy in the near-term.

China is New Zealand's second largest trading partner.

On Monday, the kiwi lost nearly 2.65% against the greenback on Monday, as market sentiment was rattled following an historic downgrade of U.S. government debt by ratings agency Standard & Poor's.

The kiwi was also lower against its Australian cousin, with AUD/NZD climbing 0.24% to hit 1.2440.

Later in the day, the U.S. was to publish preliminary data on nonfarm productivity and labor costs.

In addition, the Federal Reserve was to announce the federal funds rate. The announcement will be followed by the bank's rate statement, which could provide hints regarding further monetary easing.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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