NZD/USD Hits 4-month Low After Fed, GDP Data

By ForexMansion.com

Forexpros – The New Zealand dollar was sharply lower against its U.S. counterpart on Thursday, falling to a four-month trough after disappointing domestic GDP data and after the Federal Reserve warned of “significant” risks for the U.S. economy.

NZD/USD hit 0.7940 during late Asian trade, the pair's lowest since May 25; the pair subsequently consolidated at 0.7972, shedding 0.51%.

The pair was likely to find support at 0.7857, the low of May 23 and resistance at 0.8063, the day's high.

Statistics New Zealand said gross domestic product grew by 0.1% in the second quarter, after expanding by an upwardly revised 0.9% in the three months to March. Analysts had expected GDP to increase by 0.5% on the second quarter.

The kiwi was also weighed by data showing that Chinese factory output fell for a third consecutive month in September, adding to fears over a slowdown in global growth.

In the U.S., the Fed unveiled a plan to sell USD400 billion of short-term Treasury bonds to buy the same amount of longer-term U.S. government debt, in an attempt to boost the economy by pushing down long-term interest rates.

“There are significant downside risks to the economic outlook, including strains in global financial markets,” the bank said.

The kiwi was also lower against its Australian cousin, with AUD/NZD rising 0.23% to hit 1.2550.

Later in the day, the U.S. was to publish its weekly report on initial jobless claims.

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