NZ dollar falls to four-year low on rate cut speculations
The New Zealand dollar plunged to its lowest level in four years versus the U.S. dollar as a downbeat business confidence survey raised speculations the central bank would slash borrowing cost next month.
A report released today showed that business confidence index dropped sharply to 15.7 in May from 30.2 in April.
Another report signaled a tumble in building consents by a 1.7 percent in April, while a report released earlier this week showed New Zealand posted its biggest 12-month trade deficit in six years.
The kiwi came under immense pressure yesterday after Fonterra Cooperative Group slashed its forecast to payout to dairy farmers.
Meanwhile, the NZDUSD is set for its sixth straight weekly decline amid speculations the RBNZ would cut interest rates as early as June.
The RBNZ has mentioned it would be appropriate to lower interest rates if demand weakened.
Later in the day, eyes will focus on U.S. first-quarter GDP, where the second reading may receive a strong downside revision to minus 0.8 percent from the preliminary reading of 0.2 percent growth.
The U.S. dollar remained firm against majors this week after fed Chair Janet Yellen hinted to cutting interest rates this year if the economy shows improvement.
As of 09:32 GMT, the AUDUSD traded lower at 0.7123 after hitting a bottom of 0.7105.
The pair has resumed its bearish direction this week, collapsing almost 2.5 percent, buoyed by the cross of the SMA 20 over SMA 50.
Now, the NZDUSD completely corrected the upside wave which began in early March, where it found some support at 113% Fibo support level, as depicted on the daily chart.
The Stochastic Oscillator momentum indicator also points the pair is oversold and may start some upside correction.