NZD/USD rises to session highs, but gains seem capped

New Zealand dollar rose to session highs against its US peer on Monday, but gains seemed to remain limited due to expectations that the Federal Reserve Bank may begin paring back its asset purchases sooner than projected.

NZD/USD reached a session high at 0.8299 at 7:20 GMT, after which consolidation followed at 0.8290, gaining 0.38% for the day. Support was likely to be found at October 30th low, 0.8193, while resistance was to be met at October 25th high, 0.8338.

US dollar received strong support on Monday after Federal Reserve Bank of Dallas President Richard Fisher said earlier in the day that the central bank needed to pare back its record stimulus as soon as possible. At a business conference in Sydney he also underscored that corporate balance sheet results in the United States appeared to be stronger than ever. Any scale back of the monetary stimulus by Fed was to correspond entirely with economic data, according to Fisher. He expressed concerns over the possible threat, which may occur, as a result of banks loose monetary policy, in case companies balance sheet results begin to normalize.

The greenback also received a boost after the Institute for Supply Management (ISM) reported on Friday that the index, gauging manufacturing activity in the United States, rose to a reading of 56.4 in October, or the highest point since April 2011, following a reading of 56.2 in September. Experts had anticipated that the index will slow down to 55.1 in October. This data reinforced the view of a possible sooner than expected scale back of Federal Reserves easing.

The ISM is expected to announce that its non-manufacturing index probably fell to a four-month low of 54.0 in October from a reading of 54.4 in September, according to the median estimate of experts participated in a poll by Bloomberg. The institute will release the official report on Tuesday.

Meanwhile, Australia and New Zealand Banking Group Ltd. (ANZ) said that the index of commodity prices in New Zealand, gauging prices of all exported goods from the country, rose 1.3% in October compared to a month ago, following the 1.0% advance in September, a revision up from a 0.9% gain previously.

Elsewhere, the kiwi dollar was higher against the euro, with EUR/NZD cross down 0.14% on a daily basis to trade at 1.6295 at 7:55 GMT. AUD/NZD pair was gaining 0.32% to trade at 1.1459 at 7:57 GMT.

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