NZD/USD lower ahead of Fed, but NZ current account balance data still provided support

New Zealand dollar slipped to lower levels against its US counterpart on trading Wednesday ahead of Federal Reserve Banks decision on policy, but the kiwi was still supported after the release of stronger than anticipated current account balance data out of New Zealand.

NZD/USD slid to a session low at 0.8212 at 0:30 GMT, after which consolidation followed at 0.8231, losing 0.12% for the day. Support was likely to be received at September 16th low, 0.8156, while resistance was to be met at May 13th high, 0.8318.

Earlier today it became clear that New Zealands current account registered a lesser than projected deficit during the second quarter of the year, as the prolonged summer drought in the country led to a decreased export. The deficit figure reached 1.252 billion NZD in Q2, while experts had anticipated a greater deficit, at the amount of 1.870 billion NZD. The deficit during the first three months of the year was 0.416 billion NZD. Despite these figures, the deficit on the current account of New Zealand decreased to 4.3% of the Gross Domestic Product during the second quarter.

Meanwhile, market participants were expecting the outcome of Fed’s two-day policy meeting. The Federal Open Market Committee (FOMC) might decrease Treasury purchases to 40 billion USD and continue to buy 40 billion USD of mortgage backed securities, according to the median estimates of experts participated in a survey by Bloomberg. Federal Reserve policymakers have pledged to maintain the benchmark interest rate at levels close to zero at least as long as unemployment rate exceeds 6.5% and the inflation outlook is no more than 2.5%. The US central bank will also release its economic forecasts for 2016 today, including its benchmark interest rate outlook.

Elsewhere, the kiwi dollar distanced from its highest point in four months against the greenback, as the the pair’s 14-day relative strength index (RSI) rose above the 70 level on Tuesday, which implies that an asset price has advanced quite fast and may be poised to reverse course of its movement. However, New Zealand dollar has appreciated 1.4% during the past week, or the best performing currency among the 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. Additionally, AUD/NZD cross was trading higher today, at 1.1370 at 7:53 GMT, up by 0.07%.