NZD/USD fell to lowest in one week after NZ trade deficit widened

New Zealand dollar slid to its lowest point in one week against the US peer on Wednesday, after a report showed that the deficit on New Zealands trade balance in August was larger than initially projected.

NZD/USD fell to a session low at 0.8219 at 3:57 GMT, also the pairs lowest point since September 18th, after which consolidation followed at 0.8227, still down by 0.66% for the day. Support was likely to be found at September 17th low, 0.8159, while resistance was to be met at September 24th high, 0.8360.

According to official data, the deficit on New Zealands trade balance widened to 1.191 billion NZD in August on a monthly basis and 2.06 billion NZD on annual basis, as both figures appeared to be the highest since September 2008. Julys revised deficit amounted to 0.771 billion NZD, while experts had anticipated that the deficit figure will contract to 0.700 billion NZD. Fonterra, the worlds largest dairy exporter based in Auckland, said that its full-year earnings dropped after a drought obstructed milk production. These results did not capture the potential impact of the contaminated milk scare that appeared in early August, before tests showed that safety fears were unfounded, Bloomberg imparted. Fonterra was “very comfortable” with the New Zealand dollar at current levels, Chief Executive Officer Theo Spierings said during an interview on Wednesday with Bloomberg Television.

In addition, traders saw an 80% chance that the Reserve Bank of New Zealand will lift its benchmark interest rate from the already record low level of 2.5% by April 2014. The odds of such an action were also 80% yesterday.

Meanwhile, market players remained wary, after New York Federal Reserve President William Dudley expressed his approval of the central bank’s decision to leave its stimulus program without change last week. He said that US economy “still needs the support of a very accommodative monetary policy.”

Concerns over the US recovery outlook appeared, after the surprising decision by the Federal Reserve Bank not to taper its stimulus program in September at its meeting last week. Another indicator to add to these concerns was the US consumer confidence, as it decreased at a faster pace than projected in September. Its corresponding index slowed down to 79.7 in September from the revised up reading of 81.8 in August.

Elsewhere, the New Zealand currency was lower against the Australian dollar, as AUD/NZD pair advanced 0.20% on a daily basis to trade at 1.1368 at 7:51 GMT. The kiwi has appreciated 4.1% during the past month, or the best performing currency among the 10 developed-market currencies, tracked by Bloomberg Correlation-Weighted Indexes. The Aussie was the second best performer, registering a 2.2% increase.