The greenback slipped against several majors after the Federal Reserve revealed its decision to maintain its interest rate at 0.25 per cent, while at the same time cut its QE program by $10 billion. The latter report dragged the currency down, which would reduce the Fed’s bond buying from the current $45 billion per month to $35 billion, wherein $15 billion will go to mortgage-backed securities (MBS), while the remaining $20 billion will be allocated to treasuries.
Meanwhile, New Zealand released mixed Gross Domestic Product (GDP) data for Q1, wherein the quarterly growth came out at 1.0 per cent, which was slightly lower than the expected 1.2 per cent. The annual rate, however, came out at 3.8 per cent, which was better than the expected 3.7 per cent. The rise was the fastest for New Zealand’s economy in six years, and was mainly attributed to the 12.5 per cent rise in the country’s construction activity, which was the biggest rise since March 2000. Although the QoQ rate was lower than expected, Westpac said that this likely won’t dissuade the Reserve Bank of New Zealand from increasing its official cash rate in July.
The combination of the weak USD and news from New Zealand helped the NZD/USD maintain much of the pair’s value despite the weak Q1 GDP. It opened today at 0.8717, and has hovered within a very tight range between 0.8710 and 0.8720 in today’s Asian session. It is currently trading at 0.8715, with initial resistance seen at 0.8778, followed by 0.8799. Meanwhile, initial support is at 0.8692, followed by 0.8671.
The aussie also received a boost from the Fed’s interest rate decision and the cut in its QE program, as the AUD/USD pair broke past the 0.9400 level yesterday. The pair has hardly moved since then, however, and is currently trading at 0.9402. Initial resistance for the pair is at 0.9458, followed by 0.9482. Meanwhile, initial support is at 0.9364, followed by 0.9341.
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