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NZD/USD edges higher before Federal Reserve Bank’s policy decision

New Zealand dollar edged higher against its US peer on Wednesday, after having fallen to a four-week low earlier in the day, as Moody’s Investors Service said that it considered reducing New Zealands AAA credit rating.

NZD/USD reached a session high at 0.8287 at 7:51 GMT, after having tumbled to its lowest point since October 2nd at 0.8214. The pair consolidated at 0.8281, gaining 0.32% for the day. Support was likely to be received at October 2nd low, 0.8194, while resistance was to be met at October 25th high, 0.8338.

Moody’s Investors Service warned that New Zealand might be stripped of its top credit rating. Moodys is the only ratings agency to still rate the nation AAA, as Standard & Poor’s and Fitch Ratings reduced their local-currency rankings by one level on September 29th 2011. This news caused the kiwi to fall to its lowest point in four weeks against the greenback, while bond yields have been forced to their fastest climb in one year.

Meanwhile, the US dollar was mildly supported by the prospect that markets have already priced in that the Federal Reserve Bank will leave its monetary stimulus intact this month. The central bank will likely reduce the current scale of its asset purchases at its meeting in March next year, according to a survey of economists conducted by Bloomberg on October 17th-18th. Federal Reserve policymakers abstained from trimming the pace of stimulus in September, as more evidence that US economy is indeed recovering was to be obtained.

Elsewhere, the kiwi dollar was higher against the euro, with EUR/NZD cross losing 0.14% on a daily basis to trade at 1.6624 at 8:18 GMT. Earlier on Wednesday it became clear that Spanish economy grew 0.1% during the third quarter of the year compared to the second in line with expectations. According to preliminary data, the annual GDP figure shrank 1.2% in Q3, again meeting expectations, after in Q2 overall economic activity decreased 1.6%. AUD/NZD pair was up 0.09% to trade at 1.1493 at 8:19 GMT. is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

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