New Zealand dollar retreated against its US counterpart on Thursday, although a report showed that Chinese advance manufacturing PMI rose more than projected in August.
NZD/USD fell to its lowest point today at 0.7808 at 0:20 GMT, after which consolidation followed at 0.7830. Support was likely to be found at 0.7800, while resistance was to be encountered at August 20th high, 0.8070.
Earlier today it became clear that Chinese manufacturing PMI advanced to a four-month high, showing a reading of 50.1 in August, outpacing preliminary estimates of a value of 48.2. Values above 50.0 usually imply that activity has expanded.
The kiwi dollar was put under pressure on Thursday after the minutes of Feds most recent meeting showed that policymakers were “broadly comfortable” with Chairman Ben Bernanke’s plan to begin asset purchase tapering this year if the economy improves, with a few officials saying a reduction might be necessary soon.
“Almost all committee members agreed that a change in the purchase program was not yet appropriate,” and a few said “it might soon be time to slow somewhat the pace of purchases as outlined in that plan,” according to the minutes of the Federal Open Market Committee’s July 30-31st meeting released yesterday. “A few members emphasized the importance of being patient and evaluating additional information on the economy before deciding on any changes to the pace of asset purchases,” the minutes also showed. “Almost all participants confirmed that they were broadly comfortable” with the committee moderating “the pace of its securities purchases later this year.”, as cited by Bloomberg. Another matter discussed by Fed officials was the rise of interest rates following the FOMC meeting in June. Some policymakers gave indications that “overall financial-market conditions had tightened significantly,” according to the minutes. “They expressed concern that the higher level of longer-term interest rates could be a significant factor holding back spending and economic growth.”
FOMC experts were still expecting that US economic growth will pick up during the second half of 2013 and increase further. The minutes revealed that a number of participants were somewhat less confident than they were in June, because of the higher mortgage rates, higher oil prices, slow growth in US export markets and the risk that fiscal restrictions might not diminish. The committee also confirmed its pledge on July 31st to continue asset purchases until “the outlook for the labor market has improved substantially.”, Bloomberg reported.
Elsewhere, the kiwi was lower against the Aussie, as AUD/NZD cross advanced 0.22% to trade at 1.1462 at 6:40 GMT.
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