NZ Dollar Falls Amid Political Uncertainty

The New Zealand dollar weakened against other major currencies in the Asian session on Tuesday amid ongoing uncertainty about Saturday’s general election as no single party won enough seats to form a government.

Investor sentiment dampened after North Korea’s top diplomat said on Monday that a weekend tweet by U.S. President Donald Trump counted as a declaration of war and North Korea has the right to take countermeasures, including shooting down U.S. bombers, even in international space.

In other economic news, data from ANZ Bank showed that the business confidence in New Zealand weakened to the lowest level in two years in September on political uncertainty. The business confidence index plunged to 0.0 in September from 18.3 in August. Moreover, this was the lowest level since September 2015.

Data from Statistics New Zealand showed that New Zealand had a merchandise trade deficit of NZ$1.235 billion in August. That missed forecasts for a shortfall of NZ$825 million following the NZ$98 million surplus in July.

Exports were up 9.0 percent on year to NZ$3.69 percent, missing forecast of NZ$4.05 billion, and down from NZ$4.63 billion in the previous month.

Imports advanced an annual 6.5 percent to NZ$4.92 billion versus forecast of NZ$4.80 billion after showing NZ$4.53 billion a month earlier.

In the Asian trading, the NZ dollar fell to near 2-week lows of 0.7236 against the U.S. dollar and 80.76 against the yen, from yesterday’s closing quotes of 0.7263 and 81.15, respectively. If the kiwi extends its downtrend, it may find support around 0.70 against the greenback, 79.00 against the yen.

Against the Australian dollar, the kiwi dropped to a 6-day low of 1.0976 from yesterday’s closing value of 1.0921. The kiwi may test support near the 1.11 region.

The kiwi edged down to 1.6385 against the euro, from yesterday’s closing value of 1.6309. On the downside, 1.66 is seen as the next support level for the kiwi.

In the events today, U.S. S&P/Case-Shiller home price index for July, U.S. new home sales index for August and U.S. consumer confidence index for September are due to be released in the New York session.

At 8:00 am ET, ECB Chief Economist Peter Praet chairs Jean Monnet Lecture, “Good Pension Design” at Second ECB Annual Research Conference organized by the ECB in Frankfurt, Germany.

At 9:30 am ET, Federal Reserve Bank of Cleveland President Loretta Mester moderates a “Global Outlook” panel at the 59th National Association for Business Economics annual…

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