NZD/USD falls as NZ retail sales disappoint

New Zealand dollar edged lower against its US counterpart on trading Thursday, as retail sales in New Zealand missed forecasts, while speculation over the timing of a possible scale back of Federal Reserve Banks monetary stimulus continued to influence sentiment.

NZD/USD fell to a session low at 0.8254 at 8:30 GMT, after which consolidation followed at 0.8267, losing 0.27% for the day. Support was likely to be received at November 12th low, 0.8170, while resistance was to be seen at November 7th high, 0.8396.

According to an official report, retail sales in New Zealand, without taking into consideration the inflation rate, climbed 0.3% during the third quarter of the year compared to the second quarter, significantly below the expected 0.9% gain and the registered 1.5% increase in Q2, as the latter has been revised down from a 1.7% increase previously.

A separate report said that nations business manufacturing index came in at a reading of 55.7 in October, from 54.2 a month ago. Values above the key level of 50.0 are considered as an indication that activity in the sector has expanded.

Meanwhile, market sentiment was strongly influenced by speculation over when the Federal Reserve Bank may consider a pare back of its quantitative easing. According to the median estimate of 32 economists in a poll by Bloomberg news, the Fed is expected to trim the monthly pace of its asset purchases to 70 billion USD at the policy meeting on March 18th-19th from the current 85 billion USD per month.

The current Federal Reserve Chairman Ben Bernanke said earlier on Thursday that he wished to see US economy in a better shape, with the rate of unemployment staying at 5% and not at the current 7%, when he steps down from his governing post in late January.

At the same time, Federal Reserve Chairman nominee Janet Yellen said in a statement released on Wednesday, that US labor market and economy as a whole were “performing far short of their potential”. The rate of unemployment was “still too high”, while inflation was expected to remain below central banks 2% objective, which provides price stability.

It also became clear that the US government starts the new fiscal year with a budget deficit at the amount of 92 billion USD in October. The government has spent 291 billion USD, while revenues during the month were 199 billion USD. The first month of the new fiscal year is usually a month with a deficit, as the federal budget has not yet received any payments. However, revenues have climbed 8% in October 2013 compared to October 2012, due to higher personal and corporate tax revenues. Government expenditures dropped 5% in October compared to the same month a year ago. The 16-day partial government shutdown may also have influenced government spending in October, according to the US Ministry of Finance.

Elsewhere, the kiwi dollar was trading steadily against the euro, with EUR/NZD cross dipping a mere 0.01% on a daily basis to trade at 1.6273 at 10:00 GMT. AUD/NZD pair was losing 0.23% to trade at 1.1270 at 10:02 GMT.