NZD/USD slipped on Middle East tension

New Zealand dollar was trading lower against the greenback on Wednesday, as sentiment was dominated by the escalating tension in the Middle East and the prospect of a US military strike in Syria.

NZD/USD slipped to a session low at 0.7745 during the early phase of Asian trade, after which consolidation followed at 0.7759, still down by 0.53% for the day. Support was likely to be found at July 8th low, 0.7700, while resistance was to be encountered at August 26th high, 0.7874.

Today market sentiment was still dominated by mounting concerns of a possible military intervention by the United States in Syria. US President Barack Obama was planning to release later this week an intelligence assessment of the alleged August 21st chemical attack outside of Damascus, while the administration has commenced consultations with US congressional leaders, Bloomberg said. At the same time, the UK, France and Turkey had already agreed to support a possible campaign in Syria.

Additionally, the one-month volatility for the New Zealand dollar options climbed 36 basis points to 13.91% and was poised for the highest level since July 15th.

Meanwhile, the US dollar received additional support after on Tuesday the Conference Board reported that US index of consumer confidence has risen unexpectedly in August, reaching a value of 81.5 up from 81.0 in July, confounding expectations of a drop to 79.0. August’s reading was the highest since January 2008. This data eased concerns over the timing of Federal Reserve Bank’s stimulus scale back.

Elsewhere, the kiwi dollar was slightly higher against the Aussie, as AUD/NZD cross dipped 0.10% for the day to trade at 1.1514 at 9:02 GMT. The Australian dollar has decreased by 12% during this year, the worst performing currency among the 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. The New Zealand dollar has also fallen, by 2.4%.