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NZD/USD saw some selling around 0.5925 as the Fed delivered a hawkish tone.
New Zealand’s trade balance fell to -NZ$2.291 billion in August from -NZ$1.107 billion previously.
The U.S. dollar (USD) continues to be boosted by comments from the Federal Reserve (Fed) extending interest rates.
Traders will focus on the preliminary reading of the U.S. S&P Global/CIPS Purchasing Managers’ Index.
NZD/USD lost momentum after hitting 0.5940 in early Asian trading on Friday. NZD/USD is currently trading around 0.5925, down 0.10% on the day. Mixed New Zealand trade balance data, while better economic growth data failed to impress NZD/USD as investors digested the outcome of Wednesday’s Federal Reserve (Fed) meeting.
The latest data released by Statistics New Zealand on Friday showed New Zealand’s trade balance (NZD) fell to -NZ$2.291 billion in August from -NZ$1.107 billion previously. New Zealand’s annual trade deficit was NZ$15.54 billion in August, compared with NZ$15.88 billion in the previous month. In addition, New Zealand’s exports during the month were US$4.99 billion, compared with the previous value of US$5.38 billion; imports were US$7.28 billion, compared with the previous value of US$6.55 billion.
Earlier on Thursday, New Zealand’s economy grew 0.9% in the second quarter, compared with 0% in the previous quarter. Gross domestic product expanded at an annual rate of 1.8% in the second quarter, compared with a 2.2% gain in the first quarter and above expectations of 1.2%. New Zealand’s improving GDP may alarm the Reserve Bank of New Zealand (RBNZ), which has said it needs to slow growth to curb inflation. The data could result in interest rates remaining at their highest levels in more than 14 years for a longer period than expected.
On the U.S. dollar, the Federal Reserve’s hawkish stance continued to boost the U.S. dollar overall. Federal Reserve Chairman Jerome Powell reiterated the U.S. central bank’s commitment to achieving its 2% inflation target at a press conference and mentioned that the central bank is ready to raise interest rates if necessary. This in turn boosted the US dollar and weighed on NZD/USD.
On the data front, the number of people filing for unemployment benefits in the United States fell to 201,000 last week, the lowest level since January. At the same time, the Philadelphia Fed manufacturing index fell to -13.5 in September from the previous value of 12.0, weaker than the expected value of -0.7. The monthly rate of existing home sales in August fell to 4.04 million from the previous value of 4.07 million.
